cancel
Showing results for 
Search instead for 
Did you mean: 

FHA interest rates vs credit score

tag
Anonymous
Not applicable

FHA interest rates vs credit score

New to the board. Thanks for the very valuable info i've attained so far...

 

I'm currently in the process of getting an FHA loan for a new build home. Its a complicated situation where I've signed the contract but the builder has not because it's a brand new subdivision and there are new protocals and i'm looking at another 5-6 weeks of waiting.

.

My current "mortgage fico" scores are; 605, 625, 651 vs FICO 8 scores that are all in the 650's, but that's another topic....

My question is, should i be pushing hard to get that middle score to 640 by paying down some cc balances or would i be better off just using that money for a larger down payment?

 

All of the info i've found online regarding fha rates in relation to credit score seems to be outdated whereas tradational mortgages look to have rate tiers every 20 pts or so. Any info on this topic would be much appreciated.

Message 1 of 4
3 REPLIES 3
ezdriver
Senior Contributor

Re: FHA interest rates vs credit score

I sell new construction as an employee of a national builder. Your middle score is sufficient to get you a prequal with the builder and that would allow you to sign a purchase agreement. It takes us 5 months to build a home ... maybe more or less for your builder. That is more than enough time to get your score to 640 before your file is fully underwritten. It won't affect the rate that you get because FHA rates are no as tied to scores as are conventional mortgages.

Message 2 of 4
Anonymous
Not applicable

Re: FHA interest rates vs credit score

So for FHA, 625 is essentially the same as 640? So is 620 considered the magic number? When we did the prequalification the LO recommended getting my middle score to a 620 but i didn't think to ask if it would further help to get to 640. 

Message 3 of 4
ezdriver
Senior Contributor

Re: FHA interest rates vs credit score


@Anonymous wrote:

So for FHA, 625 is essentially the same as 640? So is 620 considered the magic number? When we did the prequalification the LO recommended getting my middle score to a 620 but i didn't think to ask if it would further help to get to 640. 


There is a big difference between 620 and 640. A 640 is min required for automated underwriting. A 620 requires manual underwriting. The former is easier on the borrower from a documentation standpoint. The rate is not affected.

Message 4 of 4
Advertiser Disclosure: The offers that appear on this site are from third party advertisers from whom FICO receives compensation.