Wells Fargo and Quicken Loans have come public saying they will lend to borrowers with a 580 FICO score or better.
This may not be so surprising to many as this has been the guidelines all along. Well supposedly, in reality the banks CAN lend at 580 FICO or above, but don't. HUH? Sound contradictory, well you are right.
But now according to these big Lenders, they have revised their lending plans and are loosening up their requirements, at least on the FICO score side. Borrowers will still be required to come up with the 3.5% down payment, that must come from the borrower's own funds. Yes, the borrower will need to jump through hoops to prove this, but then that is a good thing.
The banks want to make sure they aren't lending to a borrower with a poor credit history. FHA has seen enough defaults of late and certainly we don't need anymore!
In order to prevent additional mortgage defaults, the requirements get more difficult to match for buyers who's FICO Score is below 580, they may be able to find mortgage money, but not without additional scrutiny to their budget and a down payment from their own funds in an amount of 10% or greater.
This is really good news for home buyers who have been trying to repair their credit, have a savings, are employed and want to purchase a home.
I'm glad to hear Wells Fargo is setting the example to expand lending practices in a time when so many lenders have retracted. We need to make financing available to those who can prove they are worthy and will be responsible home owners.
Let common sense prevail, on both sides.
[mortgage title="How Much Can You Afford?" mortgage_term="30"]