We all know that banks made their lending criteria pretty tough after the real estate bubble burst in 2007. Today most major banks require a credit score around 640 before making a loan.
Except for Well Fargo. In mid January, Wells Fargo started providing FHA mortgages to borrowers with credit scores as low as 500.
Here is the breakdown:
– Borrowers with credit scores 500 – 579 need to make a down payment of minimum 10% (gifted funds or down payment assistance is not allowed)
– Borrowers with credit scores 580 – 599 need to put down 5 percent (gifted funds or down payment assistance is not allowed)
– Borrowers with credit scores 600 or higher need only 3.5% down
Good or bad you ask? Well, some may say “Another bubble?” But, in my opinion it’s good. Properties will start moving again. Especially the ones that are in segment of starter homes. As long as we stay away from 100% financing with no income verification practices.