FHA overdraft question...

[Anonymous]

Hey there everyone, I’ll give you a quick run down of my situation...

I’m buying a house for 100k with an FHA loan.
-my credit score is 619
-my debt to income ratio is 7%
-3.5% for a down payment
-2.5k for earnest deposit
-10k in reserves (not including earnest and down payment money)
-15 year fixed rate mortgage @4.125%

So here’s my question:

I’m using quicken loans and I just got into underwriting a this past Monday. On Friday (2 days ago) I get a call from one of their specialists telling me that my loan is going to get denied unless I can raise my credit score over 620... the reason it will be denied is because there is 1 overdraft on my bank statement from February (Dumb mistake on my part. But I was changing automatic bill pay from one account to another and made a Mistake).

I’ve been doing research and I can’t find any information stating this is grounds enough to be denied for an fha Loan. The guy at quicken told me my only other option was to get a co-signer and put down 20k for a down payment. Which is not possible for me to do. Any suggestions? Can I or should I try another lender?? Help is appreciated!! Thank you!

[Anonymous]

Most FHA lenders require a 620 midscore, so no matter why you're a point under, it could be cause for denial. It's the numbers that they care about. 

So you need to add a point or two to your score? There might be an easier way to do that, depending on how much time you have. Do you have credit cards with utilization over 9% on any of them? Knocking that down using the AZEO method would likely give you 10+ points. The only issue is that you'll have to wait until they report.

[Anonymous]

The only card I have is paid off completely as per the lenders request. They told me 580 was the minimum score they needed so that’s why I’m confused. I also just got an email saying they completed the appraisal of the house as well. I don’t know what to think

[Spider07]

I called Quicken Loans last year when I was looking at building a house and they flat told me that if our score was below 620, they couldn't help us.  We were at 579 at the time of the inquiry.  I went with another Mortgage lender and our mid low score was 647 when we closed, about 9 months later.  I would look for another lender personally, maybe a local one that don't use overlays.  

[JVille]

There is a problem with switching lenders on FHA, the FHA case # has already been issued and appraisal done. Good luck getting that puppy transferred from an internet lender to a local lender. This is a prime reason for dealing with a local mortgage professional vs a nameless faceless entity online.

[Anonymous]

My understanding is if you have an overdraft and you are attempting an FHA loan, it can kick you into manual underwriting.