For the past year a mid-score of 620 was required to fund a loan. Currently a mid-score of 580 would qualify for a FHA loan due to a shift that lenders are making to make FHA available to borrower’s with less than perfect credit scores. Loans with mid-score of 580 are tightly underwritten. FHA loans to a borrower with mid-score of less than 620 will have slightly higher interest rates along with a longer turnaround time of at least 45 days to closing. Although this option is available to borrowers, it is my practice to assist the borrower in improving their credit scores as much as possible.
Manufactured homes have also returned for some FHA programs. Manufactured homes will require minimum mid-score or 620. These loans will also be tightly underwritten with a slightly higher interest rate and 45 to 60 days till closing. The delay is due to the limited amount of investors that will purchase these loans. The additional underwriting requirements or “overlays” allows the investor to pick the best loans to purchase. It is not an uncommon practice for lenders to be strict or have additional conditions when lenders are limited. Investors will also place a limit on the age of properties and locations in addition to other underwriting conditions.
Please contact me for additional information regarding these loans or with any mortgage questions.