| New Lending Rules For Bad Credit Borrowers |
| Articles - Mortgage |
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The financial industry has sure taken a beating the last year or so, and along with the suffering have been some guideline changes. As part of the conditions to receive bailout money the lenders have to tighten a bit as far as qualification guidelines for borrowers.
The financial industry has sure taken a beating the last year or so, and along with the suffering have been some guideline changes. As part of the conditions to receive bailout money the lenders have to tighten a bit as far as qualification guidelines for borrowers. The changes i am mainly talking about affect the FHA loan programs which have been life savers for people with bad credit. Before March of 2009 a borrower could get an FHA loan no matter what their credit score was. This is not the case anymore. Borrowers must have at least a 620 score to even be considered for an FHA loan these days. Debt to income ratios and Housing ratios have not changed however which is a good thing. The ratios are that your new house payment can got up to 31% of your income and that your total debt can be as high as 43% of your income. By having these ratios stay the same it will help many people qualify as times are very tight. The way appraisals are ordered has also been changed. Brokers and lenders used to be able to just order an appraisal from who ever they would like, but this is not the case anymore. The government has determined and sanctioned a third party company that will order the appraisal for you. FHA has also changed their long standing 3% downpayment requirement to 3.5%. This means borrowers will have to put just a little more down in order to buy a home these days. Changes and guideline changes are necessary for lenders to minimize risk, and in a financial environment like today risk must be minimized as much as possible. DISCLAIMER: This article is provided as information only and is not to be taken as financial advice. Greg writes articles about bad credit mortgages and for bad credit mortgages help |