FHA recently changed its minimum credit score to 580, which qualifies you for lending programs that require only a 3.5 percent down payment.
VA loans are 100-percent financed and set aside for active and retired military, along with their families. There is no minimum credit score to qualify, though a better credit score will get you a better interest rate. Typically to get approved on A VA loan, you will need a 620 mid score with no bankruptcies or foreclosures in last 2 years with clean credit since BK or Foreclosures.
The better your score, the better your interest rate is likely to be. If your score is between 620 and 639â€”considered a risky score by some creditorsâ€”you could pay an interest rate of 5.718 percent on a $300,000, 30-year conventional mortgage. As of mid-August, 2010, If your score is at the high end, 760 to 850, your interest rate could be 4.129 percent on the same loan. A score of 650 may net you a rate of 5.172 percent.
USDA Home Loan Debt Ratio Waivers will be considered when the borrower has a middle credit score of 660 or higher, and the co-borrower has a credit score of at least 620.
If borrowers have credit scores of 659 or below, additional compensating factors will need to be documented for the USDA Home Loan Underwriters.
First... don't give up. I had a client with a 485 middle score once. He had spoken to 3 lenders and all 3 lenders told him to file BK. Not wanting to play Attorney, I ask him to send me a copy of his credit report. After reviewing it, it wasn't all that bad. Most people really don't know who to turn to or what to believe because there are as many people in my business with different opinions. I don't care what you read or what you hear. The magic number is 640. Yes most of us lenders or brokers have sources for lower credit scores, but sending a loan to one of companies is a nightmare in most cases. I encourage to read to read some of my blogs concerning credit. I am sure you pick up some useful tips to help you work on your credit. The gentlemen I was referring to went from 485 to 672 in 3 months. All he did was follow some basic strategies. Although we are not licensed in your state, please feel free to contact me with any questions you may have. My own credit after my divorce was on the mid 500s. I listened to my own advice applied myself and now my scores in are the high 700s. If I can do it, so can you.
Best of Luck!
FHA financing just requires 3 years from a foreclosure, however if you've had a repossession since the foreclosure then a lot of times the underwriter will want at least 2-3 years from when the repossession occurred, as foreclosures are considered a "major derogatory" and so the credit history after the foreclosure occurred is closely scrutinized. Further, if the repossession still has an owing balance then it's also possible that the amount would need to be paid off as part of the loan approval. Lastly, while your credit scores can qualify for FHA financing, they are on the lower end of what lenders will accept as most lenders are looking for 620-640 credit scores for their FHA loan programs. To lessen the likelihood of the repossession being an obstacle to qualify, I'd suggest you work on improving your credit scores. You can accomplish that by having several credit accounts where all payments are made on time and keeping credit card balances as close to $0 as possible. Further, if there is any negative items on your credit report that not reporting correct information, disputing them with the credit reporting agencies can also help.
Shane Milne | Lending in all 50 states | NMLS #81195
shane@thebesthomeloans | 949-273-4161 direct
I do not have any recommendations as to whom you can talk to, but most likely the reason you are not able to get an FHA loan has to do with your credit score, rather than the 6 year old bankruptcy and repossesion. I would personally try finding a mortgage broker that is also a certified financial planner. Together you should be able to come up with a plan to improve your credit score and obtain a loan to buy yourself a house. It will take some time and effort, but it is doable.