Make sure any loan officer that tells you they can do it spends the bucks to run DU or some other AUS. The minimum credit score thresholds are only lender overlays, FHAâ€™s TOTAL Scorecard is the real test and unless the loan officer/lender spends the money to run it then they are only guessing. A pre-approval letter is not proof they ran it, make them show you the findings, hate to see you waste money because someone hopes it sticks.
A live underwriterâ€™s thought process - Annie says she has great income, but she has bad credit, what gives? If she canâ€™t pay her obligations now how is she going to be able to pay them if we lend her a mountain of new debt? Will I lose my job if I approve this loan?
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Financing Kentucky One Home at a Time
I answer questions about financing real estate based on my decades of experience dealing with mortgage underwriters. This answer is my personal opinion, has not been reviewed or approved by the company I work for. I do not offer legal or tax advice, if you need answers from an attorney or CPA find one knowledgeable in your local market.
Finding a lender who can lend with a low score, finding a program that will reduce your down payment, these are great things. But if you have, for example, $15K of collections that must be paid before you can even get to the closing table, that's something it will help you to start working on now. And likely, over time, doing so will improve your credit too.