FHA and even conventional will underwrite fairly low on the credit spectrum, basically if you have any positive history (a few years on a few tradelines which if you have a 60D late reasonable chance you do) there's a decent chance you can find something that will work. Finish your clean up and then find out what your scores are, you may have a lot of options.
Do make sure to leave a small balance on one of your cards, all $0s unfortunately is a different part of the algorithm which historically has been "not using credit" and therefore a "riskier" borrower ergo lower score.
Got 6 months to tweak that so no big deal, but getting things paid down and old derogatories cleaned up is a huge deal.
@bellagio1 wrote:That reply was very helpful as I was wondering the same thing .
My scores are so all over the place vantage says 625 and fico8 shows 687 on TU and 676 on EX . So I don't know which lenders will use which . Is there anyway to find out prior to applying ? Also. Does anyone have specific lenders in mind that may work with a lower score ? I heard that credit unions are more lenient ?
Mortgages generally have third party standards namely the GSEs (Fannie and Freddie for all things conventional mortgage), and the FHA for, you guessed it, FHA loans.
There are some other loan types out there but if it's not insured or sold to a third party, the bank has to hold it... those are called portfolio loans, and in the current market hardly anyone is doing that except in jumbo territory. There aren't that many institutions that want to hold on to a 3.5% piece of paper on a 30 year term.
CUs may be more lenient when it comes to other credit products, for mortgages don't believe the hype. They may have better rates than the big banks (who are priced to discourage conventional loans) but they won't be any looser with the underwriting criteria generally they especially don't generally hold the loans.
https://www.fha.com/fha_credit_requirements
Fairly easy to find minimums that the VAST majority of lenders will play ball with... maybe 0.1% of them or fewer will do otherwise and usually those have much higher downpayment requirements or interest rates, reason being they are going to get stuck with the paper so they want to hedge their chances towards being made whole.
If I had to find someone, look for a mortgage company that does only mortgages and a lot of them: they are unlikely to have silly overlays that are higher than the actual requirements they need to underwrite and more importantly sell the mortgage to someone else. Smaller shops that doesn't specifically deal with mortgages tend to lag the most recent mortgage underwriting standards anecdotally.
