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Qualifying for a home loan may be easier than you think…

Shawn Von Talge


Many of today’s would-be homeowners fear that current lending standards are too strict to allow them to qualify for a home purchase. While this may have been the case in recent years and months past, I can honestly say that this trend has been waning for the last several months and is slowly improving. The days of 700+ credit scores and 20% down payment have passed (not that 20% down payment was ever a requirement but that was the perception). Moreover we have seen pertinent guidance from Fannie Mae and Freddie Mac as it relates to their new Reps and Warrants policy (a benefit in helping lenders mitigate risk, which helps them open up lending further). We have also seen many big banks and aggregators (Wells Fargo being one), Flat Branch Home Loans included, start to reduce some overlays that have hindered lending in the past. One example of this can be seen in the reduction of credit score minimums from 660 to 640 and now down to 620 (some institutions are even lower).

Besides the credit score hurdle the most common issue securing home financing has been saving and/or coming up with the down payment required. Lending has adapted well to this hurdle with the implementation of the 97% conventional My Community Mortgage and Non-MCM option as well as the FHA (Federal Housing Administration) program which requires only 3.5% down payment (which can come in the form of a gift), the USDA (United States Department of Agriculture) program which requires no down payment for those areas deemed “rural in nature” as well as the newly released NHF Program (National Housing Fund) along with the MHDC (Missouri Housing Development Commission) program which requires an investment of only 0.5% and one of the best programs out there for our ever important veterans is the VA (Veterans Affairs) program which requires no down payment and carries no PMI.

So to those that have been wondering or have remained on the sidelines to recognize the “American Dream” touch base with a lender and see what programs you qualify for. The opportunity is a good one and do not let the past lending standards or perception discourage you. Homeownership could be just around the corner and a phone call away!

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