Special Real Estate Report
How tough is it to get approved for a mortgage? How low can your
FICO credit score go before your lender shows you the door? And how much
monthly debt can you be shouldering — credit cards, student loans, auto
payments — but still walk away with the home loan you’re seeking? You might be
surprised. New data from technology company Ellie Mae, whose loan application
and management software is widely used in the residential finance field,
reveals that even if you’ve got what seems to be a deal-killing low FICO score
or you’re carrying a high amount of debt, you still might have a shot at
qualifying for a home loan to buy the house you want.
Consider some of these findings from Ellie Mae’s latest sampling
of recently closed loan applications nationwide: The credit scores of most
successful applicants remain well above historical averages, but significant
numbers of homebuyers are squeaking through with sub-par scores. The amount
borrowers must pay upfront can be much smaller than a lot of buyers sitting on
the sidelines might think. The average down payment on Department of Veterans
Affairs loans at the end of 2016 was just 2 percent — and that’s higher than
the VA’s bare minimum requirement, which is zero down. FHA’s minimum is 3.5
percent and the typical approved applicant came close to that at 4 percent
down.
So how do buyers with sub-par FICOs, skimpy down payments and high
qualification ratios manage to get a home loan? The key is this: They don’t
have these negative factors rolled into their applications all at once. If they
did, they’d be rejected. If they’ve got a weak FICO, they need strong
“compensating factors” elsewhere in their application to counterbalance the
credit score deficiency. Maybe it’s a larger down payment than typical, lower
than average qualification ratios or higher bank reserves.
Source: Ken Harney, The Nation’s Housing
Shared by
Bob
Fisher
McLean Mortgage
Senior Loan Officer
NMLS ID #: 1028088
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