High FICOs -- but can't qualify for a loan

Asked by Tanya, Los Angeles, CA Tue Oct 13, 2009

Both my husband and I have high FICOs (above 760), great DTIs, low debt, long credit history, high incomes, but only qualify for a FHA loan! The reason was 'insufficient' credit history in the past 12 months – apparently, guidelines have changed, and now both of us need to have at least 3 revolving credits each (6 per household!), but I have only 2!
I have sold my condo last year, and closed the mortgage I had for 8 years, but according to the lender since that is closed, it does not count. I need 12 months of at least 3 ‘trade lines’. I have one credit card and one car loan, and I really don’t need more. According to the lender, I should open one more account in my name and wait a year. That is absurd!
Is this really the new requirement? Do we have other options?

We are trying to buy a house for $560,000 with 20% down. I was told with FHA, I will still have to pay PMI regardless of how much I put down. I am bewildered!

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, ,
Thu Sep 15, 2016
We do not have a minimum trade-line requirement for conventional or Jumbo loans.

Please contact me through my profile.

Good luck!
0 votes
Reohomelender, , Diamond Bar, CA
Wed Dec 15, 2010
It seems like the lender you were dealing with had too many internal Risk layers on their conventional products.
The good news is that as long as the DU findings are Approved/Eligible we can do this loan for you. If in fact we need additional trade lines there is way to use other means to supplement.
There is a way or a loophole to get this loan closed.

I work out of our Whittier and Diamond Bar Branch.

Prospect Mortgage - RLG West-IMB
Office: (909) 348-6914
Cell: (310) 713-2488
Fax: (877) 868-7189
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Tue Dec 14, 2010
Hey the good news is - Tanya asked this question over ONE YEAR ago, so by now her credit history should be long enough to qualify for a conventional loan !!

Too bad she is probably long gone..............what a difference a year makes
0 votes
Ruth and Per…, Agent, Los Gatos, CA
Tue Dec 14, 2010
Hi Tanya

You should try http://www.amerisave.com Or


Good luck
0 votes
Matt Larson, , Chino Hills, CA
Tue Dec 14, 2010
What you're experiencing is a credit market where everything needs to fit in a box. Conventional loans have always had tradline requirements. Putting 20% down on $560,000 leaves you with a loan amount above the conforming loan limit of $417,000. The loan you have applied for is categorized as a conforming high-balance loan and will be subject to even more stringent guidelines. There is no grey area in the conventional world.
If you really want the house, you should consider a FHA insured loan. FHA guidlines allow the use of non-traditional tradelines such as a cell phone or utility bill when traditional lines of credit are not availble. You can always open another revolving account and refinance into a conventional loan in a year.
Mortgage these days is more about making things work than about making sense. You are not the only ones scratching your heads. Your situation is not bad at all, so don't stress! It's not a reflection of you. It's a reflection of the lending environment.

Matt Larson
Regional Manager
0 votes
Tanya, Home Buyer, Los Angeles, CA
Thu Oct 15, 2009
Hi Brittany -

We have been on our jobs 10 and 8 years respectively. We checked with our credit union and they do not give jumbo loans, only conforming up to $416,000. Looks like that is a trend with a lot of credit unions these days.
I guess, we will try other options..
0 votes
Brittany Sim…, , Columbus, OH
Thu Oct 15, 2009

Try a local credit union or small lender. They will "portfolio" their loans and do not have to adhere to Fannie and Freddie standards. You may also consider working with a mortgage broker.

The bit about PMI and FHA loans is correct. No matter what your downpayment is on the purchase with FHA, there will be PMI. It seems like we are missing something else. How long have you been on your jobs? They can use alternative credit such as utility bills to qualify and rent payments.
0 votes
Tanya, Home Buyer, Los Angeles, CA
Thu Oct 15, 2009
I just found out that the new Fannie Mae requirement is to have at least 3 trade line of credit open. Does that mean than I cannot get a regular loan, but have to go FHA?
0 votes
Kim Noonan, Agent, New Lenox, IL
Tue Oct 13, 2009
I would suggest speaking to another lender - with the info you've posted, it doesn't sound right.

Could be that the lender you were dealing with would make more $$$ pushing you into an FHA loan, so that's the answer you were getting. Did you get a good faith estimate from them? Were there discount points and/or a 1% loan origination fee noted in the 800 number section of the estimate? With rates as low as they are right now, there really is no need to have to pay points on any kind of loan.

And yes, that it true that FHA loans have PMI (called MIP with an FHA loan) which must be paid up front (or rolled into the loan). 30 year FHA loans will require MIP for at least the first 5 years or when the FHA mortgage balance is 78% of the property value (whichever occurs later). 15 year loans have different requirements.
Web Reference:  http://www.kimnoonan.com
0 votes
Luke Allison, , Asheville, NC
Tue Oct 13, 2009
It is very possible that these guidelines were specific to the lender/broker you were dealing with. I know for instance that we can make an underwriting decision even using alternative credit items that are not on the credit report. I don't see anywhere in our guidelines that a specific number of tradelines is required. As far as I am concerned, income, assets and low debt are much more suitable factors for credit approval than whether or not you open up an Old Navy card. That just sounds ridiculous.

If you need some assistance and would like a new loan approval, I would be more than happy to assist you. Let me know if you have any questions.

Luke Allison
Bank of America Home Loans
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