Mortgage insurance companies tighten credit

 Loan Guidelines, Residential Mortgage  Comments Off on Mortgage insurance companies tighten credit
Feb 232018

For more information, please contact me at (512) 261-1542 or

By G. Steven Bray

As you’re probably aware, when buying a home, if your down payment is less than 20%, your mortgage payment will include mortgage insurance. This insurance is the lender’s way sharing some of the risk associated with more highly leveraged loans.

We call companies that specialize in this form of insurance mortgage insurance or MI companies – pretty clever, huh – and they often have special guidelines that apply to loans that require their product.

Recently, the MI companies expressed concern about Fannie Mae and Freddie Mac increasing the amount of debt they’re willing to accept for a borrower receiving a conventional loan. Both now accept loans for which the borrower’s debts equal up to 50% of the borrower’s gross income.

Four of the MI companies announced that starting next month, they will require a 700 credit score anytime the borrower’s debt exceeds 45% of gross income. One company further is requiring a min 5% down payment in such cases. (Recall that it’s possible to get a conventional loan with as little as 3% down.)

I don’t expect this will affect a huge number of borrowers as most folks having lower credit scores and making small down payments find it more advantageous to use the FHA program. However, it does represent the first tightening of credit standards I’ve seen in a while.

Minimum credit score for mortgage falling

 Loan Guidelines, Owner-occupied, Residential Mortgage  Comments Off on Minimum credit score for mortgage falling
Jan 292015

For more information, please contact me at (512) 261-1542 or

By G. Steven Bray

It’s nice to be able to report some good news. Credit standards are relaxing just a bit. Our minimum credit score for using an FHA loan to purchase a home is now 600. This minimum applies to single-family homes and duplexes, assuming you plan to live in one of the units. The minimum score for 3- and 4-unit homes remains 620.

Even better, if you want to refinance an FHA loan, we can accept a credit score as low as 580. In some cases we’ll be able to use FHA’s streamline process, which means you can qualify regardless of your current income and debts. However, if your credit report shows a foreclosure, your credit score needs to be at least 600.

The minimum credit score for conventional loans remains 620.