Home Foreclosure: The New Credit Standards to Qualify for a Mortgage Brought on by the Crisis


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Because of the foreclosure crisis we’re going through, new credit standards for purchasing homes have been put into place. Depending on which side of the fence you’re on, it’s either a good thing, or a hindrance to buying a home.

Here we’re going to look at the FICO score. Following is a look back at what FICO scores used to have to be to qualify, and what they need to be now.

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First-Time Home Buyer Mortgage Qualifications: A Look Back at Old FICO Standards

On a recent news cast, the announcer blared from the screen that some credit card issuers were looking at making 740 the FICO score you needed to qualify for a credit card. It used to be that if you took a breath, you could get a credit card. Even pets could get credit cards (this is how free willing credit card companies were when extending credit).

So, what does this have to do with getting a mortgage? Well, who extends credit for credit cards? Banks.

And, who extends credit (loans) for mortgages? Banks.

Zero Down Home Loans: Get 100% Financing with a 580 or 620 FICO Score?

FICO scores have to be a lot higher than they used to be to qualify for a home loan. When I was a mortgage consultant, a prospective homeowner could qualify for 100% financing and a conventional mortgage with a 620 FICO score in most cases.

In a lot of cases, a prospective homeowner could qualify for 100% with a 580 FICO score — it would be subprime, but they wouldn’t have had to come to the table with any money nonetheless.

The New Reality: What Your FICO Score Need to Be to Buy a Home Nowadays

Now, banks have raised the bar on what your FICO score has to be to get the best interest rate . . . and it ain’t what you’ll read when you go online. Most sites still have it at 620 to 640. It’s not.

Many mortgage lenders now – whether they’re on the record or not – want you to have scores of 750- 780 to qualify for the best interest rates on conventional mortgages.

Refinancing a Mortgage: 720 Not Good Enough

As the editor of this site, I get a lot of insight from readers and from friends and acquaintances alike.

One friend of mine went to refinance his mortgage. He’d recently come back from being deployed, had paid off some bills and thought it would be easy for him to refinance. After all, his credit score was a 720, he’d been on his job for 13 years and had been in his home for more than five years.

But, even with all of this, he was unable to refinance.

I think a lot of banks are scared of where the market is right now – and how long it’s going to take it to recover.

Home Loan: How Much of a Down Payment Do I Need to Qualify for a Mortgage?

More Mortgage Questions Answered: In a future post here, we’ll look at what banks expect in the way of down payment nowadays.

Got Bad Credit: Learn How to Repair Your Credit So You Can be “Mortgage Ready”

Before you can fix your credit, the first thing you need to do is understand what it is and how lenders use it. Repairing your credit is like being part of some special club. You have to gain access to the rules of the “credit repair game” in order to be able to “compete” and clean up bad credit.

Learn the credit repair rules that banks play by so you can qualify for a home loan to purchase the home of your dreams.

First-time Home Buyer Loans: Need Down Payment Assistance to Qualify for a Mortgage? Get details on this in the video below.


P.S.: Business Opportunity:
Learn How to Start a Foreclosure Cleanup Business. Read how one foreclosure cleaning biz owner makes up to $40,000/wk.

P.P.S.: Found this post informative? Follow Foreclosure Business News on Twitter.

Copyright © 2009 Yuwanda Black for Foreclosure Business News. Article may not be reprinted or reproduced in any manner without the express, written consent of the author.

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