Can We get a FHA mortgage with score 640? our Realtor says NO!

8 Replies

Hi Everyone!

I'm a little confused with this, I asked our Realtor if we can buy a property with the FHA mortgage and with 640 credit score because I found a property (a duplex for 175,000 000) that could be good for our first investment he says that we need at least 695 or 700 to get the mortgage but I had read in one of your blogs that that can be possible with at least 620 or something like that . We are going to have an appointment with our bank to try to get the mortgage we are looking for but I'm afraid that they will say No as well can We try anyway or should we wait to work with the score to get it higher?


Yes, you should be able to get a FHA mortgage with a 640+, but there are many other factors other than credit score. Employment history, debt to income, default judgements, etc. You need to talk to a lender directly to get you pre-approved.

I am a Realtor, and have sold FHA properties to many clients with a 640+ credit score.

It could have something to do with the purchase price of the home. They may only lend you X amount based off of your credit score while the same income with a higher score would be a larger amount. 

The 640 score isn't a problem on a owner occupied home however investment property may have different standards.  As a Realtor I always tell my clients to check with a lender.  i have lenders that will lend with a 580 and the proper debt to income ration (not more than 43%) I also have lenders that give people a rough time with a 650.  Each to his own in that case.   And I'm guessing the price of the duplex is $175,000 and there may be a few extra zeros on that in your post?  In all seriousness though...check with a lender.  I always tell my clients that the lenders are experts at lending and I am the "expert" at finding them the property they are looking for. 

I thought the new rule on FHA was 580 credit score. But when you say "your first investment," it's confusing as if you mean it's your first home where you will live in one side, then FHA should work. If you mean you already own a home but want FHA for an investment property, they don't do that -- owner-occupied only. Also, if it is your first home, you can look in your area for first-time homebuyer help where the state or locality actually helps you buy with 0 down FHA (In VA, it's called the VHDA program) as long as you take their class and agree to live there so many years. The program should be able to direct you to lenders willing to work with FHA guidelines.

People need to understand that guidelines are minimums.

So for example FHA could say 580 is the minimum which means lenders can't go below that for example. It doesn't mean 100% of the lenders are going to adopt that practice. You might find 80% will not do anything less than a 640 credit score etc.

So it's at the discretion of the lender if they want to go down to the lowest allowable score per federal guidelines of if they feel safer at something higher. Your credit score is just one component of underwriting for loan approval. The lender looks at your tri-merge credit report and takes the middle score usually to go off of. The lender loan report looks sometimes different than a standard credit report as it has specific home loan algorithms factored in.

Your broker/agent should not be making these blanket statements on whether you can or cannot get a loan. It's really hard to say without looking at your total situation and not just what the score is. 

Your problem is your asking the dog what is the best brand of catnip. Your don't ask a Realtor, you ask a mortgage broker that does FHA loans. Now make a few calls to the right people.

I definitely agree with Joel and Brian. You have to communicate with your mortgage brokers/bankers who work with FHA loans in order to find out what you qualify for and then let the real estate agent do their job. The RE Agent/Broker shouldn't tell you what you qualify for financially. You should already know what you are qualified for from your finance people.

@Joel Owens @Brian P.

Hi Veronica 

I'm not sure why your realtor told you that but you should be able to get a FHA might want to get a new realtor?! Also talk to your lender.

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