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What if my credit score goes up before close?

This regarding FHA loans. I've been doing a lot of research and found that if a person's credit score is below a 580 they are required to put up 10%, but if its above, only 3.5% is required.

I am currently under contract to build a home so my application and close dates are about 6 months apart. What happens if my credit score rises above the 580 mark before close? Am I only required to put the 3.5% up at that time? Or working with a lender, will they see that it will be very possible due to several factors that it will be above that mark, and make it contingent upon reaching that level?
  • April 15 - US
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Answers (4)

It is unlikely that a lender will approve your loan for a 3.5% down payment contingent upon obtaining the higher score. However, if you are already under construction, and your score rises prior to completion, you should absolutely consult with your lender as not only will you possibly be able to get the reduced down payment, but you might very well be offered a lower interest rate. Good luck .. And keep striving for that higher credit score... It will pay off big for you in the long run in many ways.
  • April 16
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Yes.  it is possible that you can lower your down payment to 3.5% based upon a new credit report.  The lender will need to pull a new report prior to closing because of the length of time before completion.  Good Luck!
  • April 16
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With a six month window in the process, I would suggest that you make sure you're comfortable with the lender you've chosen.  With an instance such as this, I would hope they provided a blueprint to you on how you can raise your score during the process, and offered advice at the time of your initial consultation.

Just as you are hoping that your scores will increase, the lender should also be closely monitoring the process to ensure your lock doesn't go down as well.

Good luck, and I hope this helps.
  • April 16
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GIVEN that you are still some 6 months away from closing, the credit score that will be used for underwriting is the score of where you are about 30-45 days from the ACTUAL  closing or OCCUPANCY....hence do what you can to improve that situation....you will also find that as you creep in to the mid 600's etc, your AVAILABLE INTEREST RATE WILL ALSO IMPROVE....not to mention the number of financing options you will have!

good luck, and congratulations on your purchase

randy
  • April 16
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