Wells Fargo says it’s accepting FHA mortgages for borrowers with credit scores as low as 500.
The move comes after NAR (National Association of Realtors) and FHA Commissioner David Stevens, among others, late last year criticized the country’s major banks for requiring credit scores as high as 650 in some cases before making loans.
At NAR’s annual conference last year in New Orleans, Commissioner Stevens said banks’ credit policies were out of sync with FHA, and artificially restraining home sales by as much as 20 percent of the potential market. BarCamp303
Under its new policy, Wells Fargo will accept borrowers with credit scores of 500-579 if they put down 10 percent (no gifted funds or down payment assistance allowed). For borrowers with credit scores of 580-599, borrowers must put down 5 percent, with the same restriction on gifts and assistance funds. Borrowers with credit scores of 600 or higher can make a 3.5 percent down payment. The new policy took effect January 15.