600-620 FHA Score KY – Louisville Kentucky Mortgage Loans (2024)

13 Jan 2024 ~ Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans

Conventional loan

A conventional loan isn’t insured or guaranteed by a government entity. You can take one out through a private lender like a bank, credit union or mortgage company. While conventional loans are more difficult to qualify for than government loans, they’re also usually more flexible.

• Minimum credit score:620
• Minimum down payment: 3-5%
• May be good for:Borrowers with good credit and minimal debt

Fannie Mae HomeReady

HomeReady is a conventional mortgage loan offered by Fannie Mae. If you apply for one, you can use income from your parents, grandparents, relatives and others to help you get approved. Upon approval, you may get rid of your private mortgage insurance, or PMI, after you pay down 20% of your home’s value.

• Minimum credit score:620
• Minimum down payment:3%
• May be good for:Borrowers with lower-than-average incomes

FHA loan

FHA loansare insured by the Federal Housing Administration. While these loans have low down payment and credit score requirements, you’ll be required to pay mortgage insurance to protect the lender in the event you default.

• Minimum credit score:500
• Minimum down payment:3.5% if your credit score is 580 or higher; 10% if your score falls in the 500-579 range
• May be good for:Borrowers with lower credit scores and down payment amounts

Freddie Mac Home Possible

The Freddie Mac Home Possible mortgage has a low down payment of 3%. But in order to qualify, you can’t earn more than 100% of the annual median income in your area.

• Minimum credit score: 680
• Minimum down payment:3%
• May be good for:Borrowers with lower incomes and down payment amounts

USDA loan

Backed by the United States Department of Agriculture, aUSDA loanis a low-interest, zero-down-payment mortgage that can help you finance a home in an eligible rural area.

• Minimum credit score: no minimum score
• Minimum down payment:0%
• May be good for:Borrowers with low to moderate incomes who want to buy a home in a rural area

VA loan

A VA loan is guaranteed by the United States Department of Veterans Affairs. As long as you’re an active service member, veteran or eligible spouse, you may get approved for aVA loan with 0% downand no PMI. But keep in mind that you’ll likely have to pay a funding fee of up to 3.6% of your loan amount.

• Minimum credit score: no minimum score
• Minimum down payment:0%
• May be good for:Borrowers who are active service members, veterans or eligible spouses

13 Jan 2024 ~ Louisville Kentucky Mortgage Broker Offering FHA, VA, USDA, Conventional, and KHC Zero Down Payment Home Loans ~ 1 Comment

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Pros and cons of FHA loans

Pros

• You can have a lowercredit score:If you haven’t established much of a credit history or you’ve encountered some issues in the past with making on-time payments, a 620 credit score — the typical magic number for consideration of a conventional mortgage — might seem out of reach. If your credit score is 580, you’re in good standing with most FHA-approved lenders.
• You can make alower down payment:FHA loans also give the option for a smaller down payment. With a credit score of at least 580, you can make a down payment of as little as 3.5 percent. If your credit score is between 500 and 579, you may still be able to qualify for an FHA-backed loan, but you will need to make a 10 percent down payment.
• You can stop renting earlier:Since FHA loans make buying a home easier, you can start building equity sooner. Instead of continuing to rent while trying to save more money or improve your credit score, FHA loans make the dream of being a homeowner possible sooner.

Cons

• You won’t be able to avoid mortgage insurance:Since your credit score is lower, you’re a bigger risk of default. To protect the lender, you have to pay mortgage insurance. You can roll the upfront insurance premium into your closing costs, but your annual premiums will be divided into 12 installments and show up on every mortgage bill. If you put down less than 10 percent, you have to pay those annual premiums for the entire life of the loan. There’s no escaping them. That’s a big difference from conventional loans: Once you build up 20 percent equity, you no longer have to pay forprivate mortgage insurance.
• You’ll have to meet property requirements:If you’re applying for an FHA loan, the property has to meet some eligibility requirements. The most important is the price: FHA-backed mortgages are not allowed to exceed certain amounts, which vary based on location. You have to live in the property, too. FHA loans for new purchases are not designed for second homes or investment properties.
• You could pay more:When youcompare mortgage ratesbetween FHA and conventional loans, you might notice the interest rates on FHA loans are lower. The APR, though, is the better comparison point because it represents the total cost of borrowing. On FHA loans, the APR can sometimes be higher than conventional loans.
• Some sellers might shy away:In the ultra-competitive pandemic housing market, sellers weighing multiple offers often viewed FHA borrowers less favorably.