There are many items that you should be aware of when you are interested in purchasing a new home from FICO credit score, to down payment, and even debt to income ratios. In this article we are going to take a look at the requirement for an FHA Loan Down Payment because FHA Loans comprise a majority of the total loans that are issued on an annual basis. To be honest, FHA has some very attractive guidelines when it comes to down payments; however, the one catch with this is that it is FICO credit score based. This is why it is so important for borrowers and potential borrowers to keep a good eye on their credit reports to ensure everything is reported properly. If you don’t have a handle on your credit report it could result in items in collections that aren’t supposed to be there and can drive your credit score down as well and take valuable time getting this corrected and fixed.
For an FHA Loan Down Payment there are two different levels of your FICO credit score that are evaluated that will determine what your exact down payment requirement will be. As mentioned earlier, your FICO credit score and history is vital in making sure you can afford the down payment needed for the home you are looking to purchase.
As you can see there is a big difference between a 600 FICO credit score and having a 560 FICO credit score. Your FHA Loan Down Payment is in direct correlation to your FICO score so that is why it is so important to have a clean credit history or at least an accurate history. Here at Mortgage Scenarios through Fairway Independent Mortgage Corporation NMLS# 2289 I, Nick Ferrante NMLS# 1110570, can help you in going through your credit report and credit history in an effort to get you to at least a 580 FICO score because having a 3.5% down payment option is a lot more affordable than a 10% down payment.
In order to give examples of the difference in your FHA Loan Down Payment it is nice to show the exact amount of money a lower FICO credit score could potentially cost you. Let’s take a look at these two down payment levels for a house with a purchase price of $150,000
As you can see there is a $9,750 increase of FHA Loan Down Payment by having a FICO credit score below 580. The other negatives to having to come up with 10% down payment with your lower FICO score is the fact you may also need to show compensating factors in order to help a possible loan approval happen. Compensating factors can included additional assets above and beyond the 10% down that can help in strengthening your mortgage application.
I take the FHA Loan Down Payment requirements very seriously and my goal is for my borrowers to have to only come up with the minimum down payment requirement. With my analysis of your credit history and report I will always try to get your FICO credit score above 580 because having a 3.5% down payment is a lot easier to facilitate than a 10% down payment. The FHA Loan Down Payment allows for a large portion of borrowers the ability to have a 3.5% down payment which will assist in getting more people in homes because it is more affordable and obtainable. If you are ready to get started with your FHA Loan then you need to fill out my application today which you can find here.