topic Re: Conventional Loan Minimum Credit Score in Mortgage Loans

Conventional Loan Minimum Credit Score

Peter1142 — Sat, 12 Oct 2013 23:59:12 GMT

My middle score is a 679. Is this one point shy of getting a conventional loan? (5% down, partially gifted.) I have one open collection on only one report for just under $1,000. It is over 3 years old, but when I disputed it, the date was updated, and that date is over 1 year ago.

I am considering buying a house that has had a prior water problem in the basement, and there is mold on some of the walls, but it looks like it has been taken care of and there shouldn't be future problems (new sump pump & concrete parging), and I don't know that I would be able to get an FHA loan unless the drywall with mold is ripped out and thrown away.

Also the PMI rates, at least for 680+, are less than FHA.

DTI is also high, 36.8%/44.5% or 40.2%/48.5% depending on how they calculate my income (it will probably be the latter, but I can get my employer to convert me to a salaried position that would change it to the former, if it helps.) I don't know what the absolute max is for conventional -- however this is NYC region where high DTI is common. There is a non-borrowing spouse that helps bring those ratios more into line, but her credit is not good enough (like, 620 middle score.)

Thanks!

Re: Conventional Loan Minimum Credit Score

Anonymous — Mon, 14 Oct 2013 14:41:01 GMT

The minimum credit score for us is only 620 but the PMI is higher every 20 points you go below 740, so at 679, it won't be worse than FHA. However, you should be aware that consumer credit scores are not really indicative of your mortgage credit score because a consumer report is often as much as 50 points higher than that of a mortgage lender due to using different analytics. Regardless, if the house has been repaired it should be good for any loan type.

Scott Drescher

Re: Conventional Loan Minimum Credit Score

frugalQ — Mon, 14 Oct 2013 16:28:02 GMT

i thought 680 was the middle score needed for conventional.

the Equifax FICO score that you purchase here is the same version used in the mortgage tri-merge pulls. However, the TU and EX versions sold here are different.

Re: Conventional Loan Minimum Credit Score

Peter1142 — Mon, 14 Oct 2013 17:47:30 GMT

The EQ score I pull here is the exact same score used by the lender I got pre-approved by several months ago, but he is not interested in selling me a conventional loan, even with 680+ credit score, so I am looking for further information on the availability of conventional loans for my score.

Did you mean to say the PMI will be higher than FHA at 679? Mgic indicates a rate of $250/month for a $250,000 purchase at 679, which is still less than FHA, and I do not think it has an UFMIP. Also, still looking for some feedback on the max DTI a conventional loan will allow. Also can someone please verify that conventional loans are available at < 680 middle score.

Re: Conventional Loan Minimum Credit Score

DallasLoanGuy — Mon, 14 Oct 2013 18:19:40 GMT

620 FICO 5% down

PMI is about the same as FHA

Re: Conventional Loan Minimum Credit Score

Anonymous — Mon, 14 Oct 2013 18:46:07 GMT

I meant that conventional interest rates are higher while the PMI is lower, so they about offset each other.

Scott Drescher

Re: Conventional Loan Minimum Credit Score

Peter1142 — Mon, 14 Oct 2013 19:01:24 GMT

@Anonymous wrote:
I meant that conventional interest rates are higher while the PMI is lower, so they about offset each other.

Scott Drescher

Yes but even if that is true, the interest is 100% tax deductible (I think PMI is as of this year, but it is questionable whether it will stay that way,) and doesn't the PMI expire on conventional loans?

If someone could tell me the max DTI a conventional will allow (with possible compensatory factors of a non-borrowing spouse), it would be appreciated.

Re: Conventional Loan Minimum Credit Score

Anonymous — Mon, 14 Oct 2013 19:16:31 GMT

The absolute maximum for conventional is 50% right now with very strong compensating factors (like 740+ credit scores, large down payment over 20% down, lots of cash in reserves, etc.), so it's more likely to be the general purpose 45% max. It's possible it will go down to 43% after January 1 with the new rules being implemented.

Scott Drescher

Re: Conventional Loan Minimum Credit Score

tooleman694 — Tue, 15 Oct 2013 14:55:55 GMT

Last time I looked, if you had under a 680 and less then 20 percent down then the backend ratio tops at 35 percent going conventional.

Re: Conventional Loan Minimum Credit Score

Anonymous — Tue, 15 Oct 2013 15:51:51 GMT

Not true with us. The guidelines are 45% unless the automated underwriting system goes a little higher or lower, both of which are rare occurances.

Scott Drescher

Re: Conventional Loan Minimum Credit Score

DallasLoanGuy — Tue, 15 Oct 2013 22:13:15 GMT

@tooleman694 wrote:
Last time I looked, if you had under a 680 and less then 20 percent down then the backend ratio tops at 35 percent going conventional.

in April i did a 626 with 5% down at 45.5%

depends on automated

just about anyone should have the same.

Re: Conventional Loan Minimum Credit Score

tooleman694 — Wed, 16 Oct 2013 01:37:01 GMT

I had a middle score of 670 something with 10 percent down and when I tried conventional I got an EA1 or something like that..

Re: Conventional Loan Minimum Credit Score

DallasLoanGuy — Wed, 16 Oct 2013 02:18:15 GMT

@tooleman694 wrote:
I had a middle score of 670 something with 10 percent down and when I tried conventional I got an EA1 or something like that..

EA1 = expanded approval.... think of it as a downgrade to manual underwrite. those are going away.... in January I think.

you got that as a result of the whole file..... NOT because of score and down payment

Re: Conventional Loan Minimum Credit Score

Anonymous — Wed, 16 Oct 2013 14:15:21 GMT

I close loans with scores lower than 670 with 5% down without a problem. The EA-1, meaning not approvable by most standards today, indicates that there are other issues that the automated system found. You have to have some compensating factors to outweigh the weaknesses.

Scott Drescher

Re: Conventional Loan Minimum Credit Score

tooleman694 — Wed, 16 Oct 2013 22:50:46 GMT

FHA took me..

Re: Conventional Loan Minimum Credit Score

Peter1142 — Fri, 18 Oct 2013 16:30:25 GMT

The LO I just spoke to told me 45% max for conventional.

Re: Conventional Loan Minimum Credit Score

capez — Mon, 15 Feb 2016 02:31:58 GMT

Re: Conventional Loan Minimum Credit Score

Anonymous — Fri, 18 Aug 2017 18:25:25 GMT

For the conventional loans: How does student loans play into the DTI when the payments are $0? Also, with a conventional loan, can you do it by yourself or do you have to put your spouse or include anything from them? thanks.