Here’s a quick breakdown of our government programs and how they can help lower credit borrowers:

FHA

  • Borrowers who have lower credit scores and not much cash for a down payment may find it easier to qualify for an FHA loan than a conventional loan.
  • Minimum FICO score of 580 (3.5% down payment).
  • Borrowers with scores below 580 may still qualify with 10% down payment.
  • Backed by the Federal Housing Administration (FHA).
  • Only FHA-approved lenders can offer these loans.
  • Allow seller-paid closing costs up to 6% of the loan.
  • Streamline refinancing options available.
  • Two mortgage insurance premiums required: upfront mortgage insurance premium (UMIP) and annual mortgage insurance premium (AMIP).
  • One-Time Close Construction Loan option available for new construction homes.
  • $100 Down Option available.
  • Several more FHA sub-programs available. See FHA programs overview here.

VA

  • Eligible military/veteran borrowers with less-than-perfect credit scores and no money to use toward a down payment may find it easier to qualify for a VA loan than a conventional loan.
  • No set minimum credit score; instead, most lenders use credit benchmarks of 620.
  • 100% financing available ($0 money down).
  • One-time VA funding fee required.
  • No private mortgage insurance (PMI) required.
  • Available mainly to eligible veterans, active duty military and surviving spouses of veterans.
  • Interest Rate Reduction Refinance (IRRRL) option available.
  • One-Time Close Construction Loan option available for new construction homes.
  • See program matrix here.

USDA

  • Borrowers with less-than-perfect credit scores, low to moderate income and no money to use as a down payment may find it easier to qualify for a USDA mortgage than a conventional mortgage.
  • Available to home buyers who are purchasing a home located in a USDA-approved rural area.
  • Minimum credit score of 640 needed to qualify.
  • Streamlined-Assist Refinance option available.
  • See program matrix here.

Fannie Mae and Freddie Mac also have options for lower credit borrowers.

Fannie Mae HomeReady ™

  • Designed to help borrowers in low-income, minority, and disaster-impacted communities obtain affordable home financing.
  • 620 minimum qualifying credit score for all qualifying borrowers; 680 minimum qualifying credit score for all qualifying borrowers if Lender Purchased Insurance
  • 95.01-97% LTVs
  • See program matrix here.

Freddie Mac Home Possible ® and Home Possible Advantage SM

  • 620 minimum qualifying credit score for all qualifying borrowers; 680 minimum qualifying credit score for all qualifying borrowers if Lender Purchased Mortgage Insurance.
  • Designed to help borrowers with low to moderate incomes and less-than-perfect credit scores obtain home financing with low money down.
  • See program matrix here.