FHA really isn't credit score driven, it's the Banks and Lenders that set those score requirements. There are a few lenders that go down to 580 with FHA, I personally have closed on several homes with clients around and under 600. I recommend all my clients that have credit issues to check with The Lenders Network, check them out. If anyone can get you approved they can!... more
You do not have to use the HomePath program, however, HomePath or Fannie Mae rather does not have the patience to wait for a 203k FHA loan (typically 45 days to close). If, however, the property needs less than $5000 in repairs to qualify it for FHA (the appraiser and underwriter decide this), then you can do a regulary FHA (203b) loan. That can close in 30 days. FHA does require an appraisal and an invoice of repairs. Although expensive, using Home Depot or Lowes can cut down on time because most lenders are already set up with them with regard to licenses etc. The lender may also have a contractor they prefer you use.
I recently had a client not qualify for the HomePath or FHA because he didn't make enough money to buy the new home with the house he couldn't sell. I sent him through a hard money lender (high rate, high closing costs, short term loan, closes in about a week). If you are a Veteran and want to use the VA loan, they too will allow up to $5000 of escrow money. Otherwise, Fannie Mae has to repair the house and they usually don't.
If you prefer, you can also by it as an investment property with 10% down and no mortgage insurance in case you have another house that you can't sell. Beware though, the maximum debt to income ratio is about 41%.
On the HomePath loan, you can finance repairs up to $30,000 or 110% of the after repair value, whichever is less. For example: I buy a house for $60,000. After repairing it, it's worth $80,000. Ten percent of $80k is $8000. Total value is $88,000. $88,000 - $60,000 is $28,000. Therefore, I can borrow $28,000 for repairs since it is less than $30,000. I don't know Rodney Mason, but I'm sure he's a good guy. I'm not a loan officer but have 12 years experience. Let me know if you have any other questions. Good closings!... more