You Can Purchase A Home With Less Than Perfect Credit

In today's economy most people have suffered some blemishes to their credit becuase of the recession. Unfortunately, as banks tightened their credit standards it made it even tougher for those people to purchase a home. As the banks were restructuring home buyers were getting discouraged as they were unable to purchase a home becuase of their credit score. Well, the leading bank for FHA loans has loosened their standards to help people relaize the dream of home ownership.

Wells Fargo Bank has adopted and changed their policies around to reflect what the federal government will back and insure for FHA loans. There are some guidleines that still need to be followed but here is the synopisis of how they have changed their guidelines:

If you have an average credit score of at least 600 you will still qualify for a standard FHA mortgage as before. The required down payment is still only 3.5% and part of that down payment can be gifted to you.

If your credit score falls between 580 and 599 you will need a minimum of 5% down payment. other restrictiosn will apply.

If your credit score falls between 500 and 579 you will need a minimum of 10% down payment and other restrcitions will apply.

The other restrcitions for scores below 600 are as follows:

Maximum debt to income ratio cannot exceed 43%. This means when you pay the mortgage and any other credit cards, student loans or car payments that total dollar amount cannot exceed 43% of your gross monthly income.

Your down payment has to come from your own funds. It cannot be a gift from anyone. You can use your tax return refund as down payment though.

You cannot have ANY late payments or derogatory credit in the past 12 months prior to applying. (medical collections and hospital bills are excluded).

If you have a bankruptcy on your credit report it must be discharged at least 2 years.

If you have a repossession it must be at least one year removed.

Absolutely NO derogatory credit with Wells Fargo on your credit report.

You will need to have potentially two months of mortgage payments in the bank after closing. However; that money can be a gift from someone.

There may be other restrictiosn that apply. This is by no means all inclusive. However; this is the basic guidelines that most people will fall within.

As we approach tax season and you are receiving tax returns your buying power might be better than you anticipated. the path to home ownership may once again be an option to you again sooner than later.....

Dave diCecco
Realtor/Broker
www.davedicecco.com