Wells Fargo Says 500 Credit Score OK

ln a long-awaited shift, Wells Fargo is providing FHA mortgages to borrowers with credit
scores as low as 500. The move comes after the National Association of Realtors and
FHA Commissioner David Stevens, among others late last year, criticized the country’s
major banks for requiring credit scores as high as 650 in some cases before making
loans.

At NAR’s annual conference last year in New 0rleans, Stevens said banks’ credit
policies were out of sync with the FHA and artificially restraining home sales by as much
as 20 percent. Under its new policy, Wells Fargo will accept borrowers with credit scores
of 500 to 579 if those borrowers can make a down payment of at least 10 percent; gifted
funds or other down paymeni assistance is not allowed.

For borrowers with credit scores of 580 to 599, borrowers must put down 5 percent, with
the same restriction on gifts and assistance funds. Borrowers with credit scores of 600 or
higher can make a 3.5 percent down payment. The new policy took effect January 15, 2011.