Fannie Mae and Freddie Mac make a program available to loan officers and lenders so that they know whether a loan is acceptable or not.  The program from Fannie Mae is called Desktop Originator (DO) and the program from Freddie Mac is called Loan Prospector (LP).  The way loan officers use this is by uploading a borrower’s application and credit report, running it and seeing whether the findings are approved/eligible or refer/ineligible.  

Although each lender varies somewhat, most often, lenders will fund loans if they receive if a loan that received an Approved /Eligible finding via DO and the FICO score is at least:

• 620 for conventional

• 580 for FHA

• 550 for USDA

• 550 for VA

The FICO scores above are for single family homes that will be owner-occupied.  For multi-unit and investment properties the FICO requirements are higher and loan to values are restricted. 

There are always exceptions when it comes to loans and FICO score requirements are no different.  Some lenders will do a manual underwrite, should the loan not receive an Approve via DO.  This is reserved for borrowers who have had some sort of special circumstance and does deserve a second look.  To clarify – this is not for someone who didn’t pay their bills because they got a divorce.  If a borrower does deserve a second look the lender is going to want a paper trail to document what happened along with a letter of explanation.

With large down payments, some lenders will go down to a 500 fico score.  If you are someone with a lower fico score your best bet is to work with a broker as brokers will have the ability to find the most flexible lenders.

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