Yes underwriting does look at value of home plus 100's of other concerns. If you have a 549 credit score you most likely can't qualify for a loan unless you have high down payment

Solution:
http://activerain.com/blogsview/1061537/dallas-homes-for-sal…

National Featured Realtor and Consultant, Texas Mortgage Loan Officer, Credit Repair Lecturer
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Lynn911

Hi J,
Unfortunately, the credit score is a major hindrance. There are some Lenders that will do what is called "common sense underwriting" where the credit score is only one of the critieria they look at and not the only one, however, in your case, I would definitely still recommend some credit counseling. You need to have someone review your credit and assist you with options to improve, not just your score, but also your pattern of credit use. You should review your credit for the last 2 years and figure out your main issues:

high balances to credit limits
late payments on accounts
too many credit accounts open
judgements and collections
late payments after a bankruptcy
etc

Caution - check your Nicor account. They report now too.

I think you may want to hold off on the purchase and not make an offer for now, until you have addressed your credit and can confidently apply for a mortgage and get approved.
I wish you the very best.. don't rush it at all..it will happen..

Thumbs up,as usual Grace for another sensible honest answer!

Hello J,

Unfortunately, Dana is correct and the minimum "mid score" accepted for an FHA home loan is 620. You might want to consider working with an experienced mortgage broker to determine what actions you can take now that will help improve your score. Remember, the 620 FICO score is the 'mid score' (the score that is calculated after taking the score from all three major credit reporting companies).

Good luck!!

Sincerely,
Grace Morioka, SRES, e-Pro
Area Pro Realty

The main factor would be your credit score which does not meet the minimum 620 required for an FHA loan in this market.