Borrowers with credit scores less than 500 are not eligible for Federal Housing Administration-insured mortgage financing, according to the new credit score and loan-to-value (LTV) requirements released today by the U.S. Department of Housing and Urban Development.
This is the first time the FHA has had a minimum score to determine borrower eligibility.
Borrowers with a credit score between 500 and 579 can receive up to 90% LTV from FHA for a single-family mortgage while any borrower with a score 580 or above is eligible for maximum funding. Non-traditional and insufficient credit is accepted provided that borrowers meet the underwriting guidelines.
100% financing is available to borrowers using Mortgage Insurance for Disaster Victims with no downpayment, as long as their credit score is above 500.
The FHA said it is providing a special, temporary allowance to permit higher LTV mortgage loans for borrowers with lower decision credit scores, so long as they involve a reduction of existing mortgage indebtedness pursuant to FHA program adjustments.
The credit standards will take effect on Oct. 4.
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The goal, of course, was to take advantage of leverage, tax breaks, OPT and OPM. I figured that if I wanted to be a real estate investor that I was going to have to take the plunge and acquire some property. What I found throughout my time as a landlord, however, is that there are other ways besides buying property to acquire valuable real estate at steep discounts.
Private lending is a technique that plenty of master investors are currently using to acquire interests in real estate for pennies on the dollar. It might be worth some discussion here.
Thanks for the well thought out and well-written articles!