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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At the time of writing, Elizabeth Weintraub, DRE # 00697006, is a Broker-Associate at Lyon Real Estate in Sacramento, California.