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Post Ch. 7 BK, FHA loan requires 660 FICO scores?

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twono
Frequent Contributor

Post Ch. 7 BK, FHA loan requires 660 FICO scores?

I talked to a local CU about an FHA loan in 15 months, (I'll be 2 yrs post DC), etc....and i was told that their 'investor' require 660 FICO scores now.  That's a big jump from 620.

 

She also told me i would have to provide the full BK filings when/if i apply for an FHA loan with them.  

 

So is this unique to this CU or is this a new trend across the board due to COVID?

Message 1 of 10
9 REPLIES 9
sccredit
Valued Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?

A lot of lenders have increased their requirements, or overlays, due to investor demands. This has been mainly caused by COVID and no one knows what that will look like in 15 months. No reason you can't get your score that high by then anyways. No reason to stress it right now. Work on your rebuild and I am sure you can get there by then. My 2 year post discharge scores are all over 700. Good luck!

Message 2 of 10
FireMedic1
Community Leader
Mega Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?

FHA Credit Requirements for 2020
FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%.

Message 3 of 10
twono
Frequent Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?


@sccredit wrote:

A lot of lenders have increased their requirements, or overlays, due to investor demands. This has been mainly caused by COVID and no one knows what that will look like in 15 months. No reason you can't get your score that high by then anyways. No reason to stress it right now. Work on your rebuild and I am sure you can get there by then. My 2 year post discharge scores are all over 700. Good luck!


Right on.....It's been a stressful few years and just want calm waters and green pastures from here on out.  Smiley Happy

 

FICO 08 scores are currently 627, 640, and 652.....almost 9 months post DC.    09 scores are all upper 600's.  So yeah, i see no probem getting close to 700 by mortgage time.  I think what's hurting me the most is my co-signed student loans that are only like 2% paid of $25,000 -  'loan balances too high'.

Message 4 of 10
twono
Frequent Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?


@FireMedic1 wrote:
FHA Credit Requirements for 2020
FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%.

Here's a copy/paste of the email i got from the mortgage manager at this local CU i've been eyeballing:

 

"Thank you for reaching out to us!

 

We do FHA, VA, Conventional, and USDA loans.

 

On the mortgage side we pull all three credit report. When open an account, credit card or auto loan they pull only Transunion.

 

If getting to buy a home keep all credit card at a 30% of the high limit, for example if you have a credit card with a high limit of a 1000.00 your 30% is 300.00 you would never want to go over this amount for it starts hurting your credit sore very much.

 

Due to Covid19 our FHA investor has raised the credit at this time to 660. You have to be two full years cleared form the bankruptcy from the discharge date and you will need to present the discharge and the full bankruptcies when applying for an FHA loan.

 

Hope this answer your questions if not give me call."

 

 

 

Thank you,

Kathy

Message 5 of 10
FireMedic1
Community Leader
Mega Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?


@twono wrote:

@FireMedic1 wrote:
FHA Credit Requirements for 2020
FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%.

Here's a copy/paste of the email i got from the mortgage manager at this local CU i've been eyeballing:

 

"Thank you for reaching out to us!

 

We do FHA, VA, Conventional, and USDA loans.

 

On the mortgage side we pull all three credit report. When open an account, credit card or auto loan they pull only Transunion.

 

If getting to buy a home keep all credit card at a 30% of the high limit, for example if you have a credit card with a high limit of a 1000.00 your 30% is 300.00 you would never want to go over this amount for it starts hurting your credit sore very much.

 

Due to Covid19 our FHA investor has raised the credit at this time to 660. You have to be two full years cleared form the bankruptcy from the discharge date and you will need to present the discharge and the full bankruptcies when applying for an FHA loan.

 

Hope this answer your questions if not give me call."

 

 

 

Thank you,

Kathy


The red part has always been 2yrs after DC. Might be time to see another lender. Might have a different investor. Weird i must say.

FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.


Message 6 of 10
twono
Frequent Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?


@FireMedic1 wrote:
FHA Credit Requirements for 2020
FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%.

Thanks firemedic....i copied this from the llink you posted.  It explains that FHA's minimum score is 580 but lenders can require a higher score to be approved for an FHA loan.

 

Copied/pasted:

 

"We get many questions about FICO scores and FHA loan requirements. Here’s one variation on a theme:

“If I only need a fico score of 580 to qualify for a FHA loan, why would my lender tell me I need a FICO score of 600 I can get pre-approved for a mortgage loan?”

This type of question addresses a common misconception about the FHA single-family home loan program--that there is a single FICO score standard for all borrowers. Is this true?

The FHA does have a section in the rulebook that lists a minimum FICO score for borrowers. In general, if your FICO score is below 580, you won’t qualify for the lowest downpayment amount of 3.5%. FHA loan applicants with scores below 500 don’t qualify at all. Those are FHA standards and NOT lender standards, an important disctinction to make.

The FICO score requirements mentioned above are the FHA minimums ONLY, and  lender FICO scores can vary from the FHA loan rules. The lender is permitted to rqeuire higher standards than the FHA loan rulebook’s own FICO requirements.

There is a caveat there--these higher credit standards must be applied in accordance with the Fair Housing Act and other federal law, lenders are free to require higher scores of FHA loan applicants.

Some are told by the lender or a pre-purchase counselor that the applicant needs a higher credit score in order to qualify for an FHA mortgage. If that applies to you, one important move to make is to contact the FHA directly at 1-800 CALL FHA. Call them to request a referral to an FHA/HUD approved housing counselor in your area.

Housing counseling from a HUD approved agency is a very good source of help and advice--a trained counselor will offer you help in understanding the FHA loan process, what lenders need in terms of good credit history, and offer borrowers ways to help improve or even correct credit reports (without paying third parties to do so on the borrower’s behalf).

FICO scores are a big part of the FHA loan approval process–going into your FHA home loan with the highest credit score you can maintain and a strong loan repayment history behind you (12 months of on-time payments for all bills is strongly recommended) makes you a much better candidate for a home loan. If you aren’t sure how to raise your credit score or improve your credit worthiness, contact the FHA for a referral to get help."

Message 7 of 10
twono
Frequent Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?


@FireMedic1 wrote:

@twono wrote:

@FireMedic1 wrote:
FHA Credit Requirements for 2020
FHA Loan applicants must have a minimum FICO® score of 580 to qualify for the low down payment advantage which is currently at 3.5%. If your credit score is below 580, the down payment requirement is 10%.

Here's a copy/paste of the email i got from the mortgage manager at this local CU i've been eyeballing:

 

"Thank you for reaching out to us!

 

We do FHA, VA, Conventional, and USDA loans.

 

On the mortgage side we pull all three credit report. When open an account, credit card or auto loan they pull only Transunion.

 

If getting to buy a home keep all credit card at a 30% of the high limit, for example if you have a credit card with a high limit of a 1000.00 your 30% is 300.00 you would never want to go over this amount for it starts hurting your credit sore very much.

 

Due to Covid19 our FHA investor has raised the credit at this time to 660. You have to be two full years cleared form the bankruptcy from the discharge date and you will need to present the discharge and the full bankruptcies when applying for an FHA loan.

 

Hope this answer your questions if not give me call."

 

 

 

Thank you,

Kathy


The red part has always been 2yrs after DC. Might be time to see another lender. Might have a different investor. Weird i must say.

FHA loans have been helping people become homeowners since 1934. How do we do it? The Federal Housing Administration (FHA) - which is part of HUD - insures the loan, so your lender can offer you a better deal.


The 2 yr post DC time frame isn't news to me.  I didn't ask her about 2 yrs post dc, or CC utilization, etc...she was just throwing that info in there.  I was curious as to what bureau they pull....**bleep** TU.  More and more CU's seem to be pulling TU.

Message 8 of 10
FireMedic1
Community Leader
Mega Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?

NFCU is EQ happy. Maybe you can get in with them?


Message 9 of 10
twono
Frequent Contributor

Re: Post Ch. 7 BK, FHA loan requires 660 FICO scores?


@FireMedic1 wrote:

NFCU is EQ happy. Maybe you can get in with them?


Burnt them for about $45k.....doubt it.  

Message 10 of 10
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