Qualifying For Mortgage Isnt Impossible

Dated: 12/09/2014

Views: 1421


Many potential home buyers are so leery about qualifying for a mortgage that they say they're not going to even try. Nearly 60 percent of potential home buyers say they want to purchase a home but they aren’t pursuing it because they believe their mortgage application would be rejected, according to a survey conducted by LoanDepot, a mortgage company. That fear has stalled many would-be buyers: Three quarters of them admit they haven’t even checked out current lender requirements, according to the survey.

But requirements over credit scores and down payments are showing signs of softening. Mortgage financing giants Fannie Mae and Freddie Mac, for example, recently announced changes that should allow lenders to feel more confident about the mortgages they approve, as they won't be subjected to costly “buyback” demands if borrowers become delinquent on the loan. These buyback fears prompted many lenders in recent years to tighten underwriting requirements and add extra fees to compensate for potential losses on loans to borrowers who have below-average credit scores, small down payments, or minimal assets in reserve.

he new policy “should encourage lenders to serve a broader range of qualified borrowers,” says David Lowman, a Freddie Mac executive vice president. It also should prompt more lenders to make “mortgages available to more borrowers,” added Andrew Bon Salle, an executive at Fannie Mae.
Fannie Mae and Freddie Mac also plan to resume lending to buyers who can make 3 percent down payments (which is lower than their current minimum of 5 percent). The Federal Housing Administration allows 3.5 percent for a down payment, but hefty insurance premiums have made its loans more expensive than Fannie and Freddie’s, the Los Angeles Times reports.
Borrowers may find that lenders are softening credit score requirements too. In October, the average FICO score for all types of closed loans was 726 – lower than the widely assumed 750 to 760, according to Ellie Mae, a software firm. The average borrower at FHA had a FICO score of 683 during October.
"There are many people who can now afford to buy a home and qualify for a mortgage but simply don't realize it," Vance Edwards, marketing program manager for Mortgage Guaranty Insurance, told the Los Angeles Times.
Source: “Nation’s Housing: Qualifying for a Mortgage May Be Easier Than You Think,” The Los Angeles Times (Dec. 7, 2014).
Blog author image

Marc Blitstein

Marc Blitstein has been a licensed Real Estate Agent since 2004. Real estate experience has been in employee relocation, residential property, short sales, investment property, and bank owned property....

Latest Blog Posts


When buying a new house, it’s easy to get distracted by size and think that bigger is always better. However, depending on your situation, the complete opposite may be true.So how can

Read More

Playoff Hockey Return To Denver

The Stanley Cup Playoffs are returning to Denver. Monday and Wednesday night lower downtown will be filled with 18,000 hockey fans. Denver is and has always been a rich sports town. The Avs, who

Read More

Bring Natural Light Into Your Home And Watch It Sell

6 tips for letting natural light sell buyers on your listingThere are tons of benefits to bringing some natural light into a home.As real estate agents, we know that not much resonates better than

Read More

Great Summer Hikes In Colorado

SPORTS OUTDOORS 10 day hikes near Denver to take this summer You don’t have to travel far or overexert yourself to experience Colorado’s beauty

Read More