my credit is a 540 and Im trying to buy a 75000 home how likely is that to happen?

Asked by Wendy, Sacramento, CA Fri Aug 1, 2008

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Mon Aug 4, 2008
Wendy - you haven't given enough information to make any sort of determination about what you might qualify for....you're past 12 months of credit history will need to be very clean to qualify for any FHA loan. Though there's a few lenders that have 540 as their minimum, you'll need to have at least 10% down with your score level......and where are you finding homes at $75k pricing?

call me if you'd like to further discuss your situation!

Jeff Marr
Stanford Mortgage
916-947-1312
1 vote
Erin Stumpf…, Agent, Sacramento, CA
Fri Aug 1, 2008
I agree with the other Erin...what is your hurry to make a purchase now? Are you working with a loan officer - and has that person told you that you qualify for a loan for your purchase? You really should have a deep discussion regarding your situation and review the pros and cons of trying to buy now vs. later. Good luck to you.
Web Reference:  http://www.erinattardi.com
1 vote
Erin, , South Lake Tahoe, CA
Fri Aug 1, 2008
Dear Wendy: As of June 1, 2008, the minimum credit score for a federally backed loan (FNMA or FreddieMac) is 650. If you are able to get a loan to purchase this property, it would be at a sub-prime rate or it may be impossible. I would recommend waiting until you can improve your credit score. If you've spoken with a lender and they've run your credit report, they should be able to give you some pointers and direction in order to improve your credit score in the shortest possible time frame.

Good luck. I hope this helps.
Web Reference:  http://SoldByErin.net
1 vote
Eddie Martini, Agent, Auburn, WA
Sun Apr 28, 2013
There are options out there for you even with that FICO score. Let us know more details on what you have your mind set on accomplishing so we can better assist.
0 votes
Bill B, , northern california
Wed Aug 6, 2008
Hi Wendy,
There are a few lenders that will allow a 540 "mid credit score" to be used in qualifying, however it will require an Approval from the Fannie Mae automated underwriting system for the lender to want to move forward. If you receive the positive finding then you qualify based on credit, income and assets.

Next consideration to determine your approval is the type of property you want to purchase. If it's a single-family residence it would be much easier to finance than if the property is a condo or manufactured home. There are a few restrictions with condos and a few more with manufactured properties.

If you like, give me a call tomorrow after 9:30 at 916/871-2250 and we can further discuss your situation.

Thanks and Good Luck!

Bill B
The Mortgage Mentors (c)
Great Advice. Great Alternatives. Great Attitudes (sm)
0 votes
Erin Newingt…, Agent, Elk Grove, CA
Tue Aug 5, 2008
Hi Wendy!

Yes...because of your credit score you do sound like you would need a FHA loan (that is a big assumption based on the little amount of information I have about your scenario though).

My question to you would be why is your credit score where it is. It could be that you just don't have enough established credit. Maybe you have opened too many accounts too quickly. Or maybe you have one late pay on your only established credit line. Although FHA does not have a minimum credit score required, most lenders that offer these loans do. Typically 580 or above is a good rule of thumb. I would get in front of a mortgage professional and see if they can coach you to get your credit score up to that minimum.

My next question would be is do you have a plan?
Have you thought about budgeting and having a savings account for the cost of home ownership? It is one thing to qualify for the loan... but what you do after you’re in the house is what is most important!

There are many options now in the Sacramento area in that price range. The great thing about it is your mortgage payment will be LESS than you are paying for rent right now. So why not buy instead of pay someone else’s mortgage payment.

Having a plan and a budget will be your key steps to home ownership. Once you have that then think about getting the loan. Any good Realtor or Mortgage Professional should be able to help you with this!

Good luck!
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