Profile picture for zofnas1231

Can I get a home loan in todays market with a score between 570 and 580?

My wife and I would love to purchase a home and get out of throwing our money away on rent. We would like for me to be the only one considered for the loan; reason being is I want to afford a home without needing her income. I currently make about $60k and all rent and utlities re paid on time. Great job stability. We are looking for a loan at about $80k for a HUD owned home; we will be placing between 3.5% and 5/6% down. As far as credit...I have 1 installment 4 months old and 2 revolving 9 months old. My last negative was about 2 years ago and all debt is paid off but because of late payments all that time ago my score is still suffering. I also filed for bankruptcy about 5 years ago after a divorce that was discharged shortly after...about 60 months ago. Will we really need to wait it out or is there anything we can do now to turn my score around quickly? We are looking to purchase in NC. Thank you so much! 
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May 31 2011 - US
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October 24 2013
Profile picture for user89247935
I am in a similar situation.  Is there a lender out there that will lend to people with credit scores under 620 now?  
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March 12 2013

Not sure this helps, but we'll go down to a 580 (but not a 579) middle score via FHA. 3.5% downpayment or as little as .5 if there is a grant available in your area  (I can lend in NC, but I'd have to research the grants).   BK shouldn't be a problem if it's 5 years ago.  If you are just shy of 580, then you may want to take a few steps to get those scores up.   It's likely that there are a few minor things that you could do to get there.   It's get a little easier once you're above 620 though....   We're much tighter on 580 scores.   As far as I know there is no way to go below a 580 score at this time on a home loan with any lender (hard money and what not aside).  

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July 19 2011
Your credit score is a major component in the formula that landing institutions use to test if one is qualified for a mortgage. Nonetheless, there are additional factors and variables in this formula. Chief among them is your down payment. If you can put down 30% or more your credit score (aka risk factor) will not play such a pivotal role anymore.
Generally speaking, with a credit score below 620 it would be very difficult to get a loan.
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July 19 2011
Profile picture for BryanzinhoDaSilva
It's going to be tough to getting a loan with a credit score under 600. The government does offer help anh smaller loans to offer which they feel that you won't ddefult on.
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July 19 2011
580 is the score you need to put 3.5% down for FHA. below that you will need to put down 10% and depending on the situation you may need to have reserves (money set aside but not used in the transaction).  For the most part, score requirements are instituted by the lenders, not FHA and can change.  Also you need to have at least one trade line over 1 year -- your rental payments can count for that.
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July 19 2011
At a 580 you can get a loan "if" you have at least 2 credit accounts reporting paid over past 12 months. We would also do a rental verification. So as long as you can afford the loan, you have at least a 580 and a couple positive accounts,...you may qualify. The only thing that would prevent you from qualifying is if you have any open judgments, defaulted federal debt (student loans, etc) or collection accounts over $5000 each.
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July 01 2011
Profile picture for snoopysdad
zofnas,

You're dealing with some of the tightest credit markets in the last 100 years. I'm a licensed mortgage broker in Florida and bank originator for all 50 states. The opening line was the bad news and the second line wasn't to solicit Your business. Most all of my extended family lives spread all over North Carolina.

Here are some suggestions (because anyone who assures You they can get You a loan, w/o You putting 25-30% down on a HUD owned property is blowing smoke, and You know where it's going)....

1-Credit Repair, and frankly I don't see how a rapid re-score is going to help You, not to mention with HUD (just like bank/FHA) owned housing, they (the bank/gov.org) want OUT, quickly and normally will only consider cash, or pre-approved buyers. A credit repair scenario is going to take You months...by then the HUD home will likely be long gone.

2-Expand Your horizons. Don't be afraid to look at both FSBO and realtor listed properties that have either:
A: Been on the market for a long time, or
B: Been significantly overpriced, with multiple price reductions.

3-Get out there and LOOK at them, preferably with a knowledgeable buyer's agent. They'll have access to the MLS and know what to look for.

4-Don't rule out Lease/Option Properties, and be prepared to negotiate seller/owner financing.

5-I have negotiated more lease/options, WITH Owner Financing, (more than a few at ZERO Percent INTEREST) than can be recalled over the last 20 years, (including a couple of our own).

6-There are more sellers than buyers, and finding the sellers who aren't "upside down" or ideally are mortgage free, allows them to be in a position to negotiate and take Your terms seriously.

7-The more You have moth balled for a deposit or down payment, the better.

8-A lease/option(to purchase) with an established PRICE, now, with 100% of Your lease payments going toward a down payment on the purchase.....

quite simply there are a world of opportunities out there, and the traditional banks aren't Your source for funds, for at least the next 2 years. Your BK is as big of a red flag (worse, actually) as a Foreclosure. Only TIME and good payment history on everything else You currently have going on in Your credit world today will fix Your middle score issues.

In today's world, we have folks with 780 bottom middle scores, both spouses qualifying, debt to income ratios lower than 22%, primary residence, and lenders looking at applications with a "How Can I KILL This Loan" mentality. The banks, especially the Big Banks are Not Interested in making mortgages currently, AND with anything shy of absolutely Stellar credit, well, I've offered You some viable options, and I hope You'll explore them...there are some pretty desperate sellers out there these days, and some dynamite opportunities for ownership.
HTH
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June 30 2011

Sure if you are working with a lender there is a rapid rescore process you can go through that should help elevate scores by disputing anything that is old or past statutes.

I have used a credit repair company in the past for clients that worked well.

Typical banks need a 620 or higher to do FHA. There are one or two lenders that also claim to go lower but nothing local that I know of.

Cheers
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June 29 2011
Wells Fargo, and other lenders I suspect, will do loans to 500 FICO.  You will need to get through some other underwriting criteria and provide up to 10% down payment.  At 580-599 they need 5% down.  Make some inquiries with different lenders and see if you can get qualified.
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June 02 2011
Profile picture for FinallyBuying

I was in about the same boat as you but contacted a lender anyways to see how they could help me and get me on a track into getting a home. I was amazed to find out that my score was actually in the mid 600's when one of those public credit score sites was saying high 500's! Makes me wonder how reliable Equifax is since that was the lowest by 70 some odd points! Good luck...I know how the process feels and how anxious you might be!

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June 02 2011
Profile picture for sunnyview
It sounds like you are on the right track. You can do it and when you get all your credit ducks in a row, it will feel great. I am sure that with all your hard work you reach your goal of being a homeowner in no time. Good luck!
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June 01 2011
Profile picture for zofnas1231
Thank you all! I just recently paid my cc's down as I carried a higher balance on both for a recent purchase (oops). This did bring my score down about 23 points from last month. Thank you all for your replies!! Diligently working at it...
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June 01 2011

You are getting close, I would need at least a year reported on something traditional like the revolving charges.  Would also require a verification of rent for the last year.  Lenders in your area will need similar.

Check your credit card balances, you want those to be less than 25% of the limit, if you go over 75% on one of them it will pull your score way down.  And they are accumulative, two cards over 75% will really pull the scores down.  The new installment debt lowered your score also.  Don't open any more accounts if you can help it.  Few more months, good luck.

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May 31 2011
Profile picture for sunnyview
From what I read, very few banks will go down to 580. I heard that Wells Fargo would with a larger down payment. You need to focus on improving your credit and target areas that will help raise your score so you have more lending choices at a lower cost. There are some tips here.

You need to know exactly what is on your credit report. Any old or incorrect information can be challenged and the credit reporting agency will remove it if the company does not explain it or does not reply. You can also target your credit usage ratios to help your score. Do not pay off old accounts without consulting a lender first. They are an excellent resource.

My advice would be to work on your credit, save for a little larger down payment and not to look at renting as throwing money away. In this dropping market, every month you don't buy that rates stay low is money in your pocket.
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May 31 2011
You need to have your middle score 580. Your score is low due to no old credit. If you waited until your revolving lines were 1 year old your score should go up by 20 points.
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May 31 2011
 
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