Question:  I hear mortgage lending regulations are loosening.  I have always struggled with a low credit score.  What score is “too low” to get a mortgage loan?

Answer:  I know lenders who are thrilled, they can offer more loans to more people.  Many in the lending business believed the government over-tightened loan restrictions, in the wake of the 2008 recession.  The resulting effect on credit score requirements:  borrowers with a 500-579 credit score qualify for an FHA mortgage loan, if they can afford a 10 % down payment.  Don’t have that much cash on hand?  A 3.5% down payment raises the credit score requirement to a minimum of 580.

Whether or not increased government regulations were an overreaction, is a matter for political and economic debate.  Now that those regulations are lifting – borrowers with previously marginal debt to income ratios and low down payments are entering the market.

We may not have fully returned to the pre-2008 lending wild west, but we are close.  I am hearing about non-FHA, 3% down payment programs, and lenders willing to waive appraisals, under certain criteria.

Regardless of available lending, make the financial decision that is right for you.  Homes are expensive, today.  Do some soul searching before you shop around.  Don’t over borrow.  Know your limits.  Make responsible choices.

Attorney James Haroutunian practices real estate law, estate planning and probate law at his new office location: 790 Boston Road, Billerica. Contact him with questions at www.hlawoffice.com, 978-671-0711 or email him at james@hlawoffice.com.

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