Loan Guidelines Easing

I know what you are thinking from reading the title to this post… “really?!? After 3% down conventional loans have gone away, you are saying loan guidelines are easing?”

Yes. Yes, I am. It is true that the minimum down payment for conventional loans is now 5%. That said, guidelines have eased in two other areas.

Credit Scores – home buyers can now qualify to purchase a home (or refinance a home) with as little as 5% down and a credit score as low as 620. Depending on a lender’s guidelines, most stopped offering conventional loans with less than a 20% down payment to borrowers with credit scores under 660. That is no longer the case.

Whether a 5%, 10% or 50% down payment, buyers can now qualify for a conventional loan with a credit score as low as 620.

Debt to Income Ratios – while Automated Underwriting might approve someone with a debt to income ratio of 51%, most lenders stopped these ratios at 45% if mortgage insurance was required and 50% if no mortgage insurance is on the loan. Not anymore.

Regardless of the debt to income ratio, as long as you get Automated Underwriting approval on loans that do not require mortgage insurance, you can move forward with the loan application to buy a home.

The minimum down payment for conventional loans has increased to 5%, but recent changes to the minimum credit score and maximum debt to income ratio will make it easier to qualify. Want to know how this could impact you? If the property is in Georgia, I can help. Contact me today to get started.

Tags: 3% down, atlanta real estate market, DTI, FICO, get prequalified, maximum debt to income ratio, metro Atlanta mortgage advice, minimum credit score requirements, minimum down payment, minimum down payment loan programs, PMI, prequalify, the mortgage blog