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600 Is The New 640: Wells Fargo Relaxes Credit Requirements for FHA Loans

by Lark Turner

600 Is The New 640: Wells Fargo Relaxes Credit Requirements for FHA Loans: Figure 1

Things could be loosening up in the mortgage lending market.

At least that’s the interpretation of a decision by Wells Fargo, which announced last week to relax its mortgage lending standards, allowing FHA borrowers with credit scores as low as 600 to qualify for mortgages, according to The Wall Street Journal. Previously, the bank required a minimum credit score of 600 for these loans.

The FHA has variable lending and down payment standards depending on a home buyer’s credit score and other factors. The lower the score, the larger the down payment.

Wells Fargo’s Tom Goyda explaining the move to the WSJ:

“The goal is to increase access to credit, especially for low- and moderate- income borrowers and first-time home buyers. These are fully underwritten, fully documented loans, consistent with FHA program guidelines and responsible lending principles.”

The WSJ reports that the bank made the decision to relax the standards “because they are more confident that forthcoming policies surrounding defaulted loan repurchases will provide more clarity, according to people familiar with the matter.”

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This article originally published at https://dc.urbanturf.com/articles/blog/wells_fargo_relaxes_credit_rating_requirements_for_mortgages/8138

2 Comments

  1. anonypants said at 4:22 pm on Wednesday February 19, 2014:
    Ridiculous. You have to have at least a few black marks on your credit for your score to be that low. If you haven't been able to pay your bills in the past AND you cannot come up with a decent-sized down payment on a house, you're just not ready for home ownership. Period.
  1. angie bates said at 12:41 am on Tuesday April 1, 2014:
    What about people like me..fine sir, who have had problems in the past but have worked furiously to straighten out their credit, and who have gotten an education. I currently work in law enforcement, I have worked hard to correct mistakes that I made in the past. I Have A DOWN PAYMENT...but unlike you, I really dont know what it is like to be able to stand above everyone and say that because you have had a few problems...you dont deserve a chance...I bet you own your own home...I bet you make more than 12.00 and hour, I bet you drive a brand new car...Yep figures...Some of us are not that lucky.

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