Friday, March 22, 2013

Ask the "Mortgage Man": FHA LOANS WITH 600 SCORES

Ask the "Mortgage Man": FHA LOANS WITH 600 SCORES: We are introducing a new program for FHA with scores as low as 600.  There is no catch! Most lenders are requiring a minimum of 640 credit s...

FHA LOANS WITH 600 SCORES

We are introducing a new program for FHA with scores as low as 600.  There is no catch! Most lenders are requiring a minimum of 640 credit scores to finance FHA, but Abacus can do much lower scores.  These programs are almost the same as the typical FHA mortgages with a few minor differences.  I am outlining the differences for both programs below.

If a borrower's credit score falls between 620-639, a maximum debt ratio of 43% is allowed.  You can't go to 45.  If a borrower's new mortgage payment (PITI) doubles what a borrower is currently paying in rent, they must show an extra 2 months mortgage payments in reserve ( IRA, 401K, etc.)
They can't spend every dollar on buying the house, as a normal FHA program allows.  You can still get the seller to pay 6% of the selling price toward the buyers closing costs, but the buyer's 3.5% down payment CANNOT be a gift.  They must show proof that it is from their own funds. 
If a borrower's credit score falls between 600-619,  maximum debt ratios may not exceed 33/45%.  In addition, the borrower must put 5% down payment, not the standard of 3.5%.  The entire down payment must be the borrower's own funds.  If there is a doubling of the mortgage payment compared to what the borrower is currently paying in rent, they must show proof of an extra 2 months mortgage payments in reserve (IRA, 401K, etc.). 

This is a great opportunity to finance people who have experienced a problem with their credit in the past but have cleaned it up and still show scores below what is the norm.  It also helps to enable borrowers with high credit card debt to be able to purchase a home before having to pay down their revolving debt. 

For more solutions to your mortgage needs please contact me on my cell, email me at andrew.williams@abacusmort.com, find me on twitter at #abacusmort or find me on facebook.

Andy Williams
President
Abacus Regional Mortgage
NMLS # 118317
484 695 5972