Sub-620 Mortgage Lender

[Anonymous]

As a result of some education loan charge-offs, my credit score took a major hit last year and I have been told that it will take a very long time for my score to recover from this. Specifically, I have been told it is not likely my score will be that magical 620 anytime soon.

In the next 9-12 months, my husband and I would like to buy a home. Considering my credit score is currently 518, I am trying to determine what options are out there for me to qualify for an FHA loan. I am guessing that my score will be in the upper-500s (crossing my fingers for 600!) by that time. I have been told that US Bank lends to sub-620 applicants. Does anyone else know of other sub-620 lenders in Ohio? Lenders you have personal experience with are even better.

Also, any strategies for qualifying with credit similar to mine? (low score as a result of charge-offs, rest of credit history is very favorable)

Thanks!

[trdmlc]

Here is another recent thread along these same lines.

http://ficoforums.myfico.com/t5/Mortgage-Loans/More-lenders-taking-Ficos-below-620/td-p/681260

[Anonymous]

Bad news is that even if you find a lender that does 620, it would be a tough sell in this situation.  More thanb likely, the student loan charge offs are recoverable and they can (and likely will) end up filing a lawsuit.  This could lead to garnishments and or liens that any lender will be very afraid of.  Also, if they were federal student loans, they may show up in the system the banks check for federal debts (most loans that are sub 680 FICO loans are some form of government loans and you can not have any gov't delinquencies and get approved).

At least, I would expect to be required to pay the loans off.

[Anonymous]

mickie - here's a little more info:

They are not Federal loans, they are private. I am not ignoring the charge offs at all. I have been making large montly payments (larger than original payment terms) on them since just a few months after they charged off so there's really not a risk of lawsuit. The problem with paying them off is that they total $104K, so they won't be paid off for years; however, like I said, I can show proof of monthly payments.

[Anonymous]

At a minimum they will require some sort of official payment plan (not just sending in money) to have been in force for 12 months with all payment on time.  Then they will count that payment in your DTI.  Either way, with a 100K default in recent history, payment plan or not, it is going to be a tough sell.