FHA Proposes Minimum 500 Credit Score to Be Eligible for HUD Government Assistance
Posted on | July 28, 2010 | 1 Comment
In the middle of July the Federal Housing Administration (FHA) proposed some new guidelines when it comes to qualifying for HUD government assistance. A very hot topic over the last several years has been the minimum credit score to qualify for an FHA loan. In the proposal, the FHA would like to implement a minimum credit score 0f 500 for any loan with FHA financing.
With this, the FHA has also proposed that a 90% loan to value be required for borrowers who have a credit score between 500 and 579. Those with a credit score of 580 or higher would adhere to the rules of the 96.5 loan to value (LTV) ratio for purchase transactions and 97.5 LTV for refinance transactions.
FHA mortgage rates have been a very hot topic when it comes to those who want to refinance to lower levels. If the FHA continues to adjust its rules and regulations it may prove to be the case that those who have made very strong financial decisions in the past will stand to benefit the most. This is happening in many parts of the mortgage industry in the second half of 2010.
Author: Alan Lake
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One Response to “FHA Proposes Minimum 500 Credit Score to Be Eligible for HUD Government Assistance”
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July 30th, 2010 @ 11:06 am
I think this brilliant! FHA is looking to offer borrowers with lower credit scores the ability to finance in a situation where by any other lender would probably not approve them. At the same time FHA is looking to cover themselves by obligating these borrower to make a bigger commitment to the mortgage from the start (10% down). I’m sure the main purpose for this down payment requirement is to insure that the borrowers will not walk away from their home at the first sign of trouble.