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Lenders more lenient with a larger down payment?

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Anonymous
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Lenders more lenient with a larger down payment?

My hubby and I are looking to buy our first house.  I have better credit scores and can probably get a mortgage in my name alone, however my middle score is not quite 620. Nothing late in three years, just high utilization and some old baddies still haunting.  We will get our utilization way down this next month, but we want to try to close by Nov. 30.  I haven't put in for a pre-approval because I am afraid its just not good enough.  It doesn't help that have absolutely no clue what my Experian score is.

 

We have a down payment that is 44% of the list price of the house we are interested in.  We did some searching and found the market value of the home, and we are thinking that is what we will put in as our offer.  At that price, our down payment is 50% of the cost.  

 

Will having such a large down payment help us get approved?  I'm not sure if the 620 is the be all end all in mortgage approvals, and really thats what is holding me back.   

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ShanetheMortgageMan
Super Contributor

Re: Lenders more lenient with a larger down payment?

There are still a handful of lenders going below a 620 score but getting thinner as time passes, and down to a 580 score on conventional mortgages is still available moreso than sub-620 on FHA.  Down payment is no substitute for a qualifying score, however even with a qualifying score doesn't mean you qualify for a mortgage, your entire situation is reviewed to determine if you present an acceptable amount of risk.  If you present too much risk, for example your score and what is bringing your scores down is weighing too heavily, then having good compensating factors, such as a large down payment, a low debt to income ratio and/or reserves/savings available after closing, certainly can do the trick.  Since you have a very significant down payment, you have some options to help you get approved, you could put it all down and save little for reserves, or just use a portion of the money for a down payment and keep more as reserves, or a combination of the two.  Your loan officer can fiddle with a computer program called "automated underwriting" which will evaluate which ways you can get approved.
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