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Will fannie mae accept credit scores below 600 with compensating factor

I have a 591 score but stable income 75k annual, strong savings (enough for ~10% down) and only debt i got going on is my car payment, which is manageable. I'd really like a coinventional mortgage because rates are lower. Is my credit excusable if i show I'm very stable everywhere else and prove my credit troubles are over by keiko.luna783194 from Pullman, Washington. Feb 23rd 2015 Reply


Bob Finch (bob.finch@theadvisorsmc.com)
#98 ranked lender in Washington - 13 contributions

Hello Keiko - It's difficult to get a loan done with a 591 FICO, but I believe it'a possible. Also, we can work on getting your score up while we are working on the file. Please give me a call at 509-293-7600 or email me at bob@gobestloan.com if you need any further assistance.

Feb 23rd 2015
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Phil Dumouchel (PhilDu)
#32 ranked lender in South Carolina - 2,224 contributions

My understanding is that 620 is the minimum credit score FNMA will allow and I do not know of any lender able to do a conventional loan below that level. You may want to use some of your cash to improve your credit profile prior to applying - which is what most lenders would end up doing to get you where you can be approved. Freddie is a little more flexible but you will not be able to get PMI with less than 20% down and a score below 620. Your other option is to find a FHA loan where that score is more workable. Good luck!

Feb 23rd 2015
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Dave Metsker (DaveMetsker)
#38 ranked lender in Oregon - 2,317 contributions

You may need to go FHA.

Feb 23rd 2015
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Derick Condron (rightstartoregon)
#33 ranked lender in Oregon - 597 contributions

You will likely have to go FHA to get your mortgage done. The conventional models look at scores under 640 very negatively. FHA rates are lower the down fall is that you will have mortgage insurance that does not fall off. You will need to refinance down the road to get the mortgage insurance removed.

Feb 23rd 2015
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William J Acres (William_Acres)
#2 ranked lender in Arizona - 7,797 contributions

Fannie Mae has a minimum credit score requirement (620) and there are no compensating factors allowed.. FHA's minimum is 500, but most lenders require a 620 or better with a handful of lenders going down to 580. As far as rates go,,, FHA rates are lower than conventional, but the monthly mortgage insurance is higher.. however in your scenario.. even if your score were 620, then a conventional mortgage would have a higher interest rate and a higher mortgage insurance premium, since loan pricing is tiered based on your credit score.. the lower the score the more you get charged.. However, with FHA, there's little difference in loan pricing when comparing a high score borrower vs. a low score borrower.. FHA is your only choice and it would net you a lower payment even if you had a 620 score and could go conventional.. I'm a Broker here in Scottsdale AZ and I only lend in Arizona. If you or someone you know is looking for financing options, feel free to contact me or pass along my information. William J. Acres, Lender411's number ONE lender in Arizona. 480-287-5714 WilliamAcres.com

Feb 23rd 2015
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Linda Wintersteen (Linda123)
#64 ranked lender in Arizona - 1,250 contributions

Do you have a business ?? I can do business loans, if you have income on business bank statements ,even for a few months, Business loans are better since your credit is not a factor .. linda

Feb 23rd 2015
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Sean Young (SeanYoung)
#2 ranked lender in Colorado - 1,106 contributions

You will need a 620 credit score to go Fannie Mae. If you did get your score improved to a 620 the mortgage insurance would still be very high with Fannie Mae with that score. FHA will have a lower interest rate and with the now reduced monthly (annual) mortgage insurance you will most likely get a better deal with FHA. Once your credit improves and you have more equity in the property you may want to look at refinancing in the future to eliminate mortgage insurance and go into a conventional loan then. I would speak with a local loan officer and have them go over all of your options that are available. Best wishes, Sean

Feb 25th 2015
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