You need a 640 middle FICO score in order to qualify for a FHA 203k Loan with most banks. The FHA 203k loan calculates the 3.5% down payment by taking the purchase price ($100,000) plus the repair escrow ($30,000) so total would be $130,000. You would need 3.5% of the $130,000 not the purchase price of $100,000.
I would suggest having someone look at your husband's credit that could tall him what he needs to do in order to improve his score to 640. Shouldn't be too hard to get from a 607 to a 640. If you would like me to review, give me a call at 410-412-3319 or you can send me an e-mail at firstname.lastname@example.org
You can regsiter for the next Free Maryland Home Buyer Seminar on June 30, 2012 at http://www.MarylandHomeBuyerSeminars.com
John R. Thomas
Certified Mortgage Planner - NMLS 38783
Primary Residential Mortgage
410-412-3319 MD Office
302-703-0727 DE Office