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Loan programs, products, & rates are subject to change without notice . Please check with your lender for further information. Thank you.

Wells Fargo Lowers Credit Score Requirements to 500 for FHA Loans

Wells Fargo implemented new underwriting rules in mid-January that will help buyers with credit scores below 600. Borrowers with credit scores as low as 500 can now qualify for a loan if they meet certain requirements. Here’s a brief outline of their new loan policies:

Borrowers with credit scores of 500-579 must make a 10% down payment and the down payment cannot be a gift or provided by a down payment assistance program such as those offered by Bond or Grant Programs.

Borrowers with credit scores between 580 and 599 must tender a 5% down payment under the same conditions as above.

Borrowers with credit scores of 600 or better can make a down payment as low as 3.5% and gift funds are accept-able.

In all cases, Wells Fargo is limiting closing cost credits to the borrower from the property seller to 3%. In the past, seller contributions up to 6% were allowed.

An FHA loan is a government insured loan. The loans are processed and funded by FHA approved lenders. If the bor-rower defaults on the loan, the government steps in, makes the lender whole, then resells the property after foreclosure.

For additional details, feel free to call me @ (512) 293-6330, or contact Wells Fargo directly at 800-869-3557.

Scott A. Stevens, GRI Citywide Realty & Free Apartment Locating

13497 N. US Hwy 183 Suite 700 Austin, TX 78750

(corner 183/Anderson Mill) Mobile: (512) 293-6330

Office: (512) 257-RENT (7368) Fax: (512) 918-3303

Email: freeflatfinder@gmail.com Licensed Realtor ® in the State of Texas

The "additional requirements" for all borrowers with FICO scores less than 600 are:

Lower Debt to Income Ratios. These could be as low as 31% for housing debt and 36% for TOTAL debt. 2 full months of "reserves" are required (cash in their bank account AFTER paying down payment and closing costs).

The reserves are calculated on the total housing payment, in other words Principal, Interest, Taxes and Insurance (PITI)

Seller contributions may not exceed 3% of the purchase price Gift funds are not allowed to count toward the down payment requirement (for any borrower with a score less than

600) Down payment Assistance Programs are not allowed to count toward the down payment requirement (for any bor-

rower with a score less than 600) The borrower must also be able to document that they accumulated the required down payment funds and that they did not come from a gift or from Down payment Assistance. They must prove they had the ability to accumulate the funds and documentation proving how they came to accumulate the funds.