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Can I get approved for a FHA loan with score 587, $6,000 down, 130,000 home?

We had some errors on our credit that were cleared up, but the score didn't go back up as we thought it should. We had a bankruptcy that has been discharged for 2 years. We haven't had any late payments in 20 months. We have no credit cards. And we have 2 car payments. Is it possible to get approved ? I contacted one lender who said we needed atleast a 600. Should I look around still?
  • March 19 2009 - US
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Answers (6)

Best Answer

"FHA just upped the fico score a week or two ago to 620."

Not true.  Many lenders have increased their scores on FHA loans, but many still go below 620. 


Mommy, it sounds like FHA may be a good option for you. 
  • March 22 2009
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Profile picture for joetow
FHA is your only option, as FNMA just changed guides on BK's in most circumstances to a 5 year wait time for a new conventional loan. HUD's minmum credit score is 500, we are one of the few that will still go that low.
  • March 22 2009
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Profile picture for whipsawfx
Chris is refering to high balance loans ($417.001-$625,000) when he state's that PMI is not available. For modest loans like what mommyof3girls wants, 680 is the minimum, and 95% LTV is ok, as long as you're not in a distressed market area. Here's a link, look at page 1 .

That being said, FHA is clearly the way to go in your case, only need 3.5% down ($4550) for a $130k home. Use the excess to pay down those credit cards, get your credit above 620 and shop away.

Remember, if its listed for $130k you can probably get it for less ...

Also check out the homepath's REO's you dont have to pay PMI, no appraisal required, seller concession of upto 6% ok ..

http://www.fanniemae.com/homepath/financing/index.jhtml
http://reosearch.fanniemae.com/reosearch/

good luck
  • March 19 2009
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I do not believe there is a lender/investor that would be able to deliver a conventional loan at 587.  There would be no adjustment worth having, nor could you get MI with all the PMI companies have minimum credit scores at 740 and a minimum 90% LTV.  Conventional shouldn't even be a maybe, it is a NO.

Pull your credit scores to 620+ and keep saving your money.  You can correct the problems yourself and should not have to pay someone.
  • March 19 2009
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Profile picture for wetdawgs
I would work hard to understand why your credit score is so low, and work to make the appropriate changes.   The biggest thing that helps credit scores is time.   It doesn't magically go up.  Do NOT waste your money on someone to "fix your credit".   They can't do anything you can't do.


  • March 19 2009
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FHA just upped the fico score a week or two ago to 620.  You might be able to go conventional, maybe.  pay someone to fix your credit.  These people usually charge $300-700 to do this.
  • March 19 2009
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