New FHA PURCHASE Guidelines — Credit Scores below 600 now allowed with more down payment

From Steve SchraderBachar, Wells Fargo Home Mortgage

”The following Credit Policy enhancement is being made by Wells Fargo Home Mortgage for FHA Purchase transactions.

Credit Policy on or after Jan. 15

Minimum loan score and LTV allowed for Purchase transactions:

Loan score lower than 500 = not allowed

Loan score 500 – 579 allowed with maximum 90% LTV and the additional requirements listed below

Loan score 580 – 599 allowed with maximum 95% LTV and the additional requirements listed below

Loan score 600 and higher allowed with maximum 96.5% LTV

Additional requirements:

ALL of the following requirements apply for transactions with loan scores less than 600:

For Accept/Refer Credit Risk Class:

Accept: maximum ratios 31/43

Refer: maximum ratios 31/36 AND two months of Principal, Interest, Taxes and Insurance (PITI) reserves

For all Credit Risk Classes:

Seller contribution limited to 3%

Gift funds may NOT be used for the required 5% or 10% down payment

Note:

Borrower’s ability to accumulate funds for down payment must be evidenced by documentation in the loan file.

Down payment Assistance Programs (DAPs) may NOT be used for the required 5% or 10% down payment

There is no change to the minimum loan scores required for Rate/Term, Cash-out and/or Streamline Refinances.”

For more information, contact:

Steve SchraderBachar
Home Mortgage Consultant
Wells Fargo Home Mortgage
MAC N8277-011
910 East First Street
Ankeny, IA 50021
515.289.4381 Tel
515.360.5197 Cell
866.779.6727 Fax
Steven.w.SchraderBachar@wellsfargo.com
http://www.wfhm.com/steve-schraderbachar