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Updated almost 5 years ago on . Most recent reply

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Victor Nkhoma
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FHA loan changes for first-time home buyers?

Victor Nkhoma
Posted

Spoke to a couple of lenders recently who mentioned FHA loan minimum credit requirement is now 640, not the 580 I initially heard. Possibly due to Covid-19 adjustments. Not sure. What have you guys heard or know anything?

Background story: A group of my friends (including me) are first-time home buyers looking to break into REI by means of House hacking.

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Guifre Mora
  • Lender
  • San Diego, CA
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Guifre Mora
  • Lender
  • San Diego, CA
Replied
Originally posted by @Victor Nkhoma:

Spoke to a couple of lenders recently who mentioned FHA loan minimum credit requirement is now 640, not the 580 I initially heard. Possibly due to Covid-19 adjustments. Not sure. What have you guys heard or know anything?

Background story: A group of my friends (including me) are first-time home buyers looking to break into REI by means of House hacking.

 
Victor,

The official minimum of FHA loans—as set out by the Department of Housing and Urban Development—is actually 580. If you can make a 10% down payment, it’s just 500. But those are only minimums to qualify for FHA insurance.

Lenders set their own credit score requirements based on how much risk they’re willing to take on. This is called in a mortgage lender overlay -a qualification requirement applied by a lender that exceeds the standard qualification guidelines for a loan program. ... In short, applying overlays means that lenders use tougher borrower qualification requirements than they are required to according to general mortgage industry guidelines. In conclusion, you will find lenders from 620-740 in min fico scores. 

You will need to shop around for the ideal lender that matches your criteria and if they are still lending under these criteria. Its a moving target. 

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