You will find that both the Deed in Lieu and Short Sale have a very similar impact on your credit score. Neither one is as bad as a foreclosure or bankruptcy at banging up your credit score. Yet, these avenues, short sale and deed in lieu, will put a drag on the credit score. And unfortunately, it will impact your ability to buy another home(and perhaps rent one) for a couple of years.... more
It is possible because the absolute minimum credit score that the FHA allows for is 500. But it is rare to find a lender who will be able to give you a loan with that score. If you do happen to find a lender to give you a loan, then yes, chances are the interest rate will be higher to make up for the risk of giving out a loan to someone who has a low 500's credit score. I have been able to give out FHA loans with credit scores as low as 580 with great rates, friendly service, and quick turn times so give me a call if you would like to speak about a loan.
Well I hope this helps! If you have any further questions or if you need a loan, feel free to contact me. Also, if you found this helpful please leave me a recommendation if you can!
Brian Nguyen Sr.
NMLS # 659743