Loan Depot -- They go down to 580 Credit Score

[donkort]

I was prequalifying for a future home purchase WAY down the road. 

And I was asked if I have "at least" a 580 FICO score. 

Perhaps, pending further research into whether they are a predatory mortgage company, this could be a boon for people with under 620 credit scores.

Upon further research, there was nothing where it was said that they are "predatory"----but it does seem as if they are not the most reputable mortgage company.

But this could be an option for someone who needs a house desperately.  Hopefully one option out of many who are better than them. 

I am hoping that people experienced in this sort of thing (e.g., people intimately involved with the mortgage industry), would chime in on this.

[Mortgage-Specialist]

Its just a lender overlay that most lenders have. For FHA, if you are approved with a score of 580 or higher, you only need 3.5% down payment... if your score is 500 to 579, you must have 10% down. It is obviously harded to get approved the lower your score is but the FHA guidelines themself are very lenient. Most consumers and many loan officers have no idea how many overlays their lender has so when a buyers loan is denied, they think that its "game over" when in reality they could have easily been approved with a lender without the ridiculous overlays. 

[VALoanMaster]

It's not just the credit score. You could meet the minimum credit score requirement & still not be "eligible" based on what's in your credit history. In addition to that, a lot of lenders that go down to a 580 score require that your file gets approved through an automated underwriting system (AUS) in order to be eligible.

I have several options for VA & FHA down to 580 (& below on a case by case basis) but about half of them require an AUS approval or a 600+ score to do a manual underwrite.