Key Takeaways
- Borrowers may qualify with a 620 credit score for conventional loans.
- FHA loans require a minimum down payment of 3.5%.
- Pre-approval can speed up your home buying process significantly.
- VA loans often require no down payment, saving you money upfront.
Article Summary
Mortgage guidelines are the rules and standards used to underwrite, approve, and fund a mortgage loan.
Mortgage Guidelines: Explained in Plain English
Mortgage guidelines serve as a lender's approval checklist. They list the minimum standards required to approve a loan.
These guidelines vary by loan type.
For instance, conventional mortgage guidelines are different from FHA guidelines, which are also distinct from VA mortgage and USDA mortgage guidelines.
Additionally, within each loan type, programs may have different requirements.
Fannie Mae's HomeReady mortgage, for example, targets low-to-moderate income households and has different standards than its HomePath program, which supports buying foreclosed properties.
Similarly, FHA's 203k rehabilitation loan has different guidelines compared to a standard FHA mortgage.
Mortgage guidelines cover a wide range of criteria, including:
- Credit score
- Down payment percentage
- Employment history
- Household income
- Citizenship status
Guidelines also outline requirements for property type, zoning, and the relationship between buyer and seller.
To lenders, these guidelines function as a checklist. When all items are met, the loan is approved.
Frequently Asked Questions About Mortgage Guidelines
Get answers to frequently asked questions about mortgage guidelines, including who creates them, how often they change, and what to do if you don't meet the requirements.
