HUD has announced (PDF) that effective Oct. 4, 2010, borrowers with a credit score below 500 are not eligible for FHA-insured mortgage financing. Borrowers with a credit score between 500 and 579 are limited to 90 percent LTV, which requires a 10 percent down payment. Borrowers with a credit score of 580 or higher are eligible for maximum financing, which requires a minimum 3.5 percent down payment. Borrowers with nontraditional credit histories may be eligible for maximum financing.
Mortgagee Letter 10-29:
Summary – FHA Guidance on Minimum Credit Scores and LTV Requirements
In accordance with the final Federal Register Notice [FR-5404-N-02] on minimum decision credit scores and LTV ratios for FHA-insured single family mortgages, the new requirements are
Borrowers with a minimum decision credit score at or above 580 are eligible for maximum financing.
Borrowers with a minimum decision credit score between 500 and 579 are limited to 90 percent LTV.
Borrowers with a minimum decision credit score of less than 500 are not eligible for FHA-insured mortgage financing.
Borrowers with a non-traditional credit history or insufficient credit are eligible for maximum financing but must meet the underwriting guidance in HUD 4155.1 4.C.3.
Borrowers using 203(h), Mortgage Insurance for Disaster Victims, are eligible for 100 percent financing and no downpayment is required, provided that the borrowers have a minimum credit score of 500 (borrowers with decision credit scores below 500 are not eligible for FHA financing).
These new requirements are applicable to all Single Family programs except Title I, Home Equity Conversion Mortgages; HOPE for Homeowners; Section 247; Section 248; Section 223(e) and Section 238. Note:
For temporary minimum credit scores and LTV requirements for refinancing conventional mortgages in a negative equity position, see Mortgagee Letter 2010-23.
For more information on building, buying, selling or leasing commercial or residential property anywhere in the world, contact Nicole Tucker, licensed agent with Keller Williams, Dallas Preston Road office at 972-992-8204 or visit my website at http://www.NicoleRE.com.
Nicole Tucker ~ Making Real Estate Real Easy!
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Filed under: buying, mortgage, real estate, Refinance Tagged: | credit score, down payment required for house, FHA Financing, financing underwriting, http://www.NicoleRE.com, HUD, Keller Williams, Keller Williams Dallas Preston Road, Keller Williams Realty, Keller Williams Realty Dallas Preston Road, Keller Williams Realty Preston Road, LTV ratios for FHA, maximum financing, minimum credit score for mortgage financing, mortgage insurance, Nicole RE, Nicole Tucker, NicoleRE
what is the amount of fha insurance? is it 100% of loan amount?
If so, waht is risk to lender?
Well, this is extremely interesting indeed. Would love to read a little more of this. Great post. Thanks for the heads-up.