As noted by the California Association of REALTORS last week, Wells Fargo announced a surprise policy reversal in January regarding FHA loans. While competitive institutional lenders are raising FICO limits to 620 or better, Wells Fargo is lowering those limits to as low as 500. For FICOs between 500 and 579, the down payment requirement is 10%, and the down payment cannot be a gift from a relative. Borrowers with FICO scores of 580 to 619 will need to put down a minimum of 5%.
For home buyers with FICOs above 620, the minimum down payment requirement remains at 3.5% and gift funds can be used. Seller concessions toward closing costs remain at a maximum of 3% of the purchase price.
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Technorati tag: wells fargo fha fico
At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.
Comments
Is this just for California, can I get a Wells Fargo loan in NY? Most online mortgage FHA require a mortgage OVER a certain amount of money, the homes I am looking at are lower than 60,000.
FHA is a federal program and Wells Fargo is a national lender. I have no idea if WF has minimum loan requirements in New York, but one call to a New York mortgage broker should clear up that question.
Do you know if Wells Fargo requires education or counseling for first time buyers qualifying with lower credit scores?
Hi, We (M&T Bank) do FHA loans in NYS all the time. We still allow a 6% sellers’ contribution (not just 3%) and since we are based in NYS. Also, we don’t charge a commitment fee on top of the bank origination charge like Wells does. We also only require 3.5% down payment for scores all the way down to 580.
I’m in my office right now.
BTW Elizabeth, I don’t find too many potential borrowers with scores under 580 who have 10% to put down anyway and typically there are judgment(s) and/or several collections against a borrower when they do have scores in the low to mid 500’s, but it is certainly a refreshing trend to see a huge bank lightening up on credit standards. The PMI companies are beginning to become a little more lax with their underwriting standards too.
Hi Andycloses,
Please let me know how to get in touch with you/your bank regarding my mortgage. I will give you details if you can email at my email.
I’ve been trying to get a FHA loan through wells fargo the last 3 months. they keep telling me my credit has to be 600, my 3 credit scores are 617, 598,598, i’ve paid off 95 percent of my debt, and i still can’t get a loan with them, and it seems my score hasn’t changed none when they check it. I got the money, just can’t seem to get the help. i was told once my 2 points go up i could get a 90,000 dollar loan as long as my taxes are under 3500 dollars. I’ve found lots of houses in the budget range that WF gave me, but it seems i always have to keep pushing it back and waiting. Is there something that can be done? i don’t know what else to pay off, i even opened up a secured credit card because they told me it would help. I live in NYS
You might check with a mortgage broker who works closely with a credit repair company. I’ve heard fascinating stories from borrowers who bumped up their FICO scores that way.
So After reading this article I get happy and call Wells Fargo. Come to Find out the Article is COMPLETELY WRONG. the 620 Credit Mark is set by the GOVERNMENT.. So this 500+ crap is just tht CRAP!!!!.. Dont believe me??? Call Wells Fargo and ask them..lollololololol
Acceptable FICO scores are set individually by banks and investor overlays.