FHA Loans for 580 credit score

Asked by Criselybello, Queens, NY Sun Feb 16, 2014

Hello, is it possible to qualify for a FHA Mortgage in Brooklyn/Queens NY with a 580 FICO score?

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13
David James, Other Pro, Bakersfield, CA
Sun Mar 23, 2014
The minimum credit score required for an FHA loan is a 580. The majority of lenders require a 620-640 but there are still a few lenders that can work with a 580 score. If you'd like to speak to a lender that can help please visit our website.
19 votes
Thank you David!!!!!
Flag Wed Jun 4, 2014
Trevor Curran, Mortgage Broker Or Lender, Great Neck, NY
Mon Feb 17, 2014
We see many credit reports with low credit scores (anything less than 620), and often many scores in the 500's. This is BAD credit. If you are one of the folks affected by this terrible economy, you have a low credit score and you have a dream of buying a home, here's some simple advice for you.
It is unlikely you could be approved for mortgage financing with that credit score at this time.
Beware of any mortgage professionals promising you an approval with such a low score. Wait on buying a home. I recommend you take the time to resolve your credit issues.
First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.
Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.
I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website. http://www.consumer-action.org/
Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE. http://www.consumer.ftc.gov/articles/0058-credit-repair-how-…
The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.
The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.

Trevor Curran
NMLS #40140
Mobile: 516-582-9181
Office: 516-829-2900
Fax: 516-829-2944
PowerHouse Solutions, Inc.
1010 Northern Blvd. Suite 234
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services
NMLS#3528

*If you thought my answer was helpful, please give me a “Thumbs Up” or “Best Answer.” Thanks!
3 votes
Megan Miller, Home Buyer, Fresno, CA
Tue Oct 6, 2015
580 is the minimum score for FHA Loans. Check out The Lenders Network ,they referred us to our lender and we were approved after being rejected by like 5 lenders!
1 vote
Jeremy Morgan, Home Buyer, Bakersfield, CA
Tue Jun 16, 2015
FHA loans provide great assistance to many first time home buyers by offering mortgage loans with lower down payments. While this is a benefit for many people, recent changes in policy may have put the loans just out of reach for some would-be homeowners with questionable credit history.
Credit History and Score Requirements

For those interested in applying for an FHA loan, applicants are now required to have a minimum FICO score of 580 to qualify for the low down payment advantage, which is currently at around 3.5 percent.

If your credit score is below 580, however, you aren't necessarily excluded from FHA loan eligibility. Applicants with lower credit scores will have to put down a 10 percent down payment if they want to qualify for a loan.

So if you're planning to buy a house, and your credit score doesn't meet the minimum, you should weigh the advantages and disadvantages of putting down a larger down payment or using those funds to try and improve your credit score first.
Benefits of an FHA Loan

The reason why FHA loans are so popular is because borrowers that use them are able to take advantage of benefits and protections unavailable with most traditional mortgage loans. Loans through the FHA are insured by the agency, so lenders are more lenient. Here are a few benefits you can enjoy with an FHA loan:

Easier to Qualify
While most loans exclude applicants with questionable credit history and low credit scores, the FHA makes loans available with lower requirements so its easier for you to qualify.
Competitive Interest Rates
You've heard the horror stories of subprime borrowers who couldn't keep up with their mortgage interest rates. Well, FHA loans usually offer lower interest rates to help homeowners afford housing payments.
Lower Fees
In addition to lower interest rates, you can also enjoy lower costs on other fees like closing costs, mortgage insurance and others.
Bankruptcy / Foreclosure
Just because you've filed for bankruptcy or suffered a foreclosure in the past few years doesn't mean you're excluded from qualifying for an FHA loan. As long as you meet other requirements that satisfy the FHA, such as re-establishment of good credit, solid payment history, etc., you can still qualify.
No Credit
The FHA usually requires two lines of credit for qualifying applicants. If you don't have a sufficient credit history, you can try to qualify through a substitute form.

For many home buyers, using an FHA loan can really make the difference between owning your dream house comfortably or turning it into a financial nightmare. The FHA provides a wealth of benefits for applicants that qualify, so make sure you're making full use of them.
1 vote
sbcovener, , Philadelphia, PA
Sun Mar 23, 2014
The minimum for a FHA is 620, not 580. Plus you must be completely up to date on all your account


Stan covener
1 vote
Frank Spauld…, , Brooklyn, NY
Wed Feb 19, 2014
I would like to see an approval for a 580 FHA approval as well as the interest rate that gets assigned to it.
1 vote
Sanjeev Ahuja, Mortgage Broker Or Lender, Floral Park, NY
Tue Feb 18, 2014
Yes you can. Keep in mind there will be other factors besides the credit score that will come in play. It would be best to meet and review the whole situation. My contact information is given below in case you like to get in touch with me.

Thanks

Sanjeev Ahuja, NMLS #148731
Mortgage Broker
Home Funding LLC
110 Jericho Turnpike Ste 214
Floral Park, NY 11001
Direct Phone 917-517-2552
NYS Registered Mortgage Broker, Dept of Financial Services, Loans arranged through third parties (NMLS # 885573)
1 vote
Frank Spauld…, , Brooklyn, NY
Mon Feb 17, 2014
Those days of 580 are long gone with the collapse of the sub-prime market. 640 is the number these days but there are lenders that will work with 620. Give me a call so I can help you qualify. 347-732-7408
1 vote
Anna M Brocco, Agent, Williston Park, NY
Mon Feb 17, 2014
Most lenders prefer a 640 credit score, however there may be some willing to work with less. Keep in mind the better the score the better the rate. Therefore why not continue improving the score and save money in the long run; see links for possible helpful information... http://www.myfico.com/crediteducation/improveyourscore.aspx http://www.experian.com/credit-education/improve-credit-score.html https://www.transunion.com/personal-credit/credit-issues-bad… https://help.equifax.com/app/answers/detail/a_id/131
1 vote
sbcovener, , Philadelphia, PA
Sun Feb 16, 2014
I believe the minimum is 640 for a FHA mortgage. You also have to be 21 and employed full time 12/18 months without a cosigner. If you have 20% to put down, your best is to contact a mortgage broker
1 vote
Dan Tabit, Agent, Issaquah, WA
Sun Feb 16, 2014
Criselybello,
Possible, maybe. Likely, no. Credit scores are just one factor in getting approved for a mortgage. You will also need income, assets, job security and a reason for your scores to be so low.
Lenders look at your middle score, so if 580 is your top score, you're out of luck for now.
My advice is to take some time to get your credit scores in order.
1 vote
580 credit score loans are not long gone. You just have to fit the box with "compensating factors". You have to have reserves for future payments, longevity on your job and proof that you have made your rent payments on time for the last 12 months. You also have to be able to show your ability to repay, and your debt to income ratio has to be 31/43. Many people cannot provide all of the above. that is why they don't qualify. The interest rate would in fact be in the low 4's.
Vanessa Thatcher
Senior Loan Officer NMLS# 41404

Atlantic Home Capital
4175 Veterans Memorial Hwy, Ste 310
Ronkonkoma, NY 11779

Office: 631-687-3510 x106
Direct Dial: 631-468-8809
Direct Fax: 631-918-5222
Cell: 631-672-4113
Flag Sat Mar 28, 2015
Jimmy Jung, Other Pro, Calabasas, CA
Sat Mar 5, 2016
You need to contact Home Loans For All. We send most of our clients there. They'll be able to find you a lender(s) that can get you your pre approval. They've been a blessing for our clients and we recommend them to everyone.

http://www.homeloansforall.com
0 votes
Invstnlfp, Home Buyer, New York, NY
Sun Jan 10, 2016
I work for a direct lender in the mortgage industry who offers conventional, FHA VA, and USDA loans in all 50 states. Are lowest score we accept for government loans are 550 when most lenders require a 620 and brokers a 580. You have to have two years of income with a score over 550 with bankruptcies discharge date 2 years and over. We have basic guidelines and a pretty easy process. Feel free to text me or call me anytime up to 10:00pm Eastern with any questions.
Brian Young 214-797-3479
0 votes
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