In this episode of "Daily Mortgage Rates LIVE," we’re tackling a topic that gives hope to many aspiring homeowners: Low FICO Score Loans. If you’ve been struggling with a less-than-perfect credit score and think homeownership is out of reach, think again—this episode is for you!
Having a low credit score doesn't have to be the end of your dreams of buying a home or refinancing your mortgage. Low FICO Score Loans are designed to provide financing options for individuals who have faced credit challenges in the past. Our expert hosts will break down everything you need to know, including:
📉 What are Low FICO Score Loans, and how can you qualify even if your credit isn’t perfect?
🏦 How do these loans differ from conventional mortgages, and what are the key eligibility criteria?
💰 What are the potential advantages and disadvantages, including interest rates and down payment requirements?
We’ll also discuss strategies for improving your chances of approval and how to navigate the process successfully. Whether you're looking to buy your first home, move into a better space, or refinance despite your credit history, this episode will give you the insights and practical tips you need.
Tune in to "Daily Mortgage Rates LIVE" and learn how Low FICO Score Loans can help you achieve your dream of homeownership. Don’t let a low credit score hold you back—get the knowledge you need to take control of your financial future today!
For more episodes visit: https://themortgagecalculator.com/Page/Daily-Mortgage-Rates-LIVE-Video-Podcast
About The Mortgage Calculator:
The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as over 5,000 Non-QM mortgage loan programs using alternative income documentation!
Using Th
The Mortgage Calculator is a licensed Mortgage Lender (NMLS #2377459) that specializes in using technology to enable borrowers to access Conventional, FHA, VA, and USDA Programs, as well as thousands of Non-QM mortgage loan program variations using alternative income documentation!
Using The Mortgage Calculator proprietary technology, borrowers can instantly price and quote thousands of mortgage loan programs in just a few clicks. The Mortgage Calculator technology also enables borrowers to instantly complete a full loan application and upload documents to our AI powered software to get qualified in just minutes!
Our team of licensed Mortgage Loan Originators can assist our customers with Conventional, FHA, VA and USDA mortgages as well as access thousands of mortgage programs using Alternative Income Documentation such as B
Episode Transcript
So welcome everyone.
(00:00):
My name is Kyle Hiersche.
I'm the COO of the MortgageCalculator joined here by our
president Nick Hiersche and ourCSO Jose Gonzalez.
We are a lender that specializesin non QM loans and what we do
every weekday at 11 a.
m.
Eastern on the shows, go throughour actual live mortgage rates.
And then we do a deep dive intoa different loan type.
Today's loan type is going to benot necessarily a loan type,
but, uh, you know, loans toaccomplish the same goal here,
(00:24):
which is low FICO score loan.
So they'll take us through somegreat ways to solve that problem
here shortly.
But first we will go through ourrates.
So Nick, if you're ready, let'spull up our live rates and see
what the rates look like today.
Lots of news in the market.
Rates are looking like theycalmed down a little bit.
(00:44):
Finally, we will compare all thedifferent.
Uh, standard loan programs fortoday.
It is October 9th, just after 11a.
m.
Eastern.
So all of our initial ratesheets are live for today.
And if you'd like an itemizedloan estimate that breaks down
all the fees, please get withour team members.
We have plenty of loan officersto help.
(01:05):
For our demo, we will always setup a basic scenario so we can
compare the APR across theprograms.
We'll use a single family home,500, 000 purchase, 400, 000 loan
amount.
That's an estimated 20 percentdown payment, 80 percent loan to
value.
We'll use a 760 estimated FICOcredit score.
And an estimated 40 percent debtto income ratio.
(01:29):
Check those settings.
Let's check out the rates fortoday.
So first up our 30 year fixedconventional option for a
primary home.
Most common option people thinkof when they think of a
mortgage.
Rates today come in at 6.
124.
Final APR 6.
427.
And if for any reason ourcustomer doesn't qualify for a
conventional option, wetypically want to quote an FHA
(01:50):
option to compare.
FHA allows more leniency oncredit issues and a higher
overall debt to income ratio,but does require upfront and
yearly mortgage insurance.
Rates come in today 5.
25, final APR 6.
193 with all the cost andmortgage insurance.
So, if our customer qualifiesfor both, FHA could be a touch
cheaper here if they're willingto do the mortgage insurance.
(02:12):
And our customers that need touse FHA, definitely very
comparable option toconventional.
And the A is only for eligiblevets and active service members.
These programs are definitelygreat for those that are
eligible.
Rates today come in at 5.
5, final APR 5.
786.
And notice when we compare thatacross the programs, the VA
(02:33):
option is going to be the bestfor our eligible borrowers.
So definitely take advantage ifyou are eligible.
And the final standard optionthat every banker lender has
USDA is only for properties inUSDA eligible areas.
That's the rural areas of thecountry.
So if the property is eligibleand the borrower is eligible,
these are great options tocompare.
(02:54):
USDA comes in today, 5.
25 final APR with all theproperties 5.
996.
So we'll compare that to FHAtypically, if our customer is
shopping in these areas, and theUSDA option is going to be a
touch cheaper than both FHA orconventional.
So definitely a good option forthose shopping in the rural
areas.
And that rounds out our standardoptions that any bank or lender
(03:17):
has, but if a customer doesn'tqualify, they may have to deny
them.
We have 5, 000 plus otheroptions.
Starting here with our non QMAltDoc option for a primary
home.
So if our customer doesn'tqualify using tax returns,
standard documentation forconventional FHA, etc.
Needs to switch to usingalternative documentation like
bank statements, 1099s, etc.
(03:38):
You can switch to this program.
Rates as low as 6.
125 today.
Absolutely amazing.
Finally, PR 6.
450.
Almost identical to conventionaltoday.
To use alternative docs of greatopportunity for our borrowers
needing to go with our alt docoptions And we have tons of
(03:59):
options for investmentproperties as well So our non qm
alt doc is up first.
So bank statement or similar forhsl for investment property
Finally, there are 7.
415 And we'll compare that withour other investment options.
Conventional is coming in todayat 6.
(04:22):
875 for an investment property.
Final APR 7.
211, so a touch cheaper than ourAltDoc.
And remember, there are nogovernment programs, so no VA,
USDA, or FHA.
But we do have all kinds ofamazing options under our
favorite program, under DSCR,stands for Debt Service Coverage
Ratio.
No employment informationneeded.
(04:43):
No income information neededfrom our borrower.
Simply use the estimated rentsto determine a DSCR value.
The estimated rents can coverthe estimated expenses, aka the
property cash flows.
That's a ratio of one or higher,which is preferred.
And with a three year prepaymentpenalty, which is standard.
Rates come in today, 6.
375.
Final APR, 6.
(05:03):
682.
Blowing conventional out of thewater.
Absolutely amazing.
And we can add a five yearprepay to some programs,
lowering it even more, rates aslow as 6.
25, final APR 6.
541, again, blowing conventionalaway.
And we have our no prepaymentpenalty option, as some states
don't allow it, and someinvestors prefer not to have a
(05:24):
prepayment penalty.
Reaches a 7 percent final APR 7.
350.
As usual, the no prepaymentpenalty option is going to be
just a touch above conventional,but I would still say a hundred
percent of investors wouldchoose the DSCR option in this
case.
And if possible, add aprepayment penalty.
It makes the deal quite a bitsweeter and the final two demos.
(05:47):
We always do our 30 year fixedsecond mortgages.
These are very popular requestsas many of our customers have
lower rates than what we'reshowing here for their first
mortgage But still need toaccess their equity We can do
that typically with a heat lockBut these options for most
borrowers even better becausethey are not adjustable in lower
rates than a heat lock So our 30year fixed second mortgage for a
(06:09):
primary home Get cash out ofthat primary home without using
a heat lock rates as low aseight percent much lower rates
than a heat lock Final APR 8.
426 So great option for thoseprimary homeowners to get that
cash out And same option forinvestment properties rates as
low as 9.
375 final APR 9.
731 and heat locks are rare forinvestment properties.
(06:30):
So these are great options forour investors that don't want to
touch that first mortgage.
Now let me switch up the screenshere and get into today's topic.
So when we're doing our livedemo, remember we always use the
high credit score so we can seeall the different programs pop
up.
But of course we always haveoptions for our lower FICO
(06:51):
scores.
It's just not as comparable.
We have to find those specificprograms that offer those
options.
So Jose will be able to presentsome of those today.
So Jose, what are our lowestoptions that we have for our
borrowers?
Good morning, everybody.
(07:11):
Thank you for joining us fordaily mortgage rates live with
the mortgage calculator.
We have some great optionstoday.
Uh, some of our options you'dprobably figure out and some of
our options that are outside thebox solutions here that we love
to provide at mortgagecalculator.
So let's jump right into our lowFICO score.
(07:35):
So our first option here is forour FHA borrower and pleased to
say that we, excuse me, we areable to go down to a 500 credit
score.
Um, with minimum down payment of90%.
Anytime your score is below 580,you are going to be required to
(07:57):
give at least 10 percent downfor any FHA loan.
That doesn't mean it's aguarantee it's going to be
approved, just that is theminimum down payment when the
credit score drops below 580.
And our low FIO score 7% at acost of 2.5 points for our 500
(08:18):
credit score, FHA purchase.
Now our 500 credit score, USDApurchase, again, great news
possible down to a 500 lowest,uh, cost option here is 7.375 at
a cost of one point, and you canbuy that down all the way to
6.25% at a cost of 2.25 points.
(08:41):
In our VA purchase, uh, we'reable to easily go down to a 580.
Now, these are our compliantrates.
Uh, we do have options below a580, but in order to be able to
offer those rates, you will needa little bit of seller credit.
As the seller would have to payfor some of the loan discount
(09:02):
fee for the borrower to be ableto be offered those rates.
So, here we have at a 580 withno seller contribution, 6.
75 is our lowest cost option ata cost of 1.
199 points.
And you can buy that down to 6percent at a cost of 2.
449 points.
(09:22):
Now for our outside the boxsolutions, we actually have DSCR
possible down to a 575 creditscore.
It is going to require 40percent down as 60 percent LTV
is our maximum LTV when ourscore is that low.
And you're looking at 10.
875 at a cost of one discountpoint.
(09:47):
And for our AltDoc purchase, uh,AltDoc, we would consider bank
statement, profit and loss,1099, uh, would be the, uh,
AltDoc options here.
And, uh, it is possible down toa 600 credit score.
(10:07):
And we can go up to 80 percenton both investment and primary
80 percent LTV.
In this case, we have aninvestment purchase, 80 percent
LTV.
Our lowest cost option is 10.
625 at par.
And you can buy that down allthe way to 8.
999 at a cost of 3.
(10:27):
375 points.
And now for some cash outoptions.
The same option available forpurchase at 60 percent LTV is
available for a DSCR cash out at60 percent LTV with our 575
credit score.
A little bit higher on the ratedue to a transaction being a
cash out.
(10:48):
We're looking at 11.
125.
At a cost of 1.
4 DSC, our cash out with a 575credit score and our low credit
score option here for FHA 580credit score, get us up to the
max 80 percent LTV.
Um, there are options below a580, but in order, uh, That
(11:10):
would be one where you'd have acompliant to see if you get any
bonafide discount points so thatyou can offer that option here.
The one without any issues is 80percent LTV.
And you're looking at 6.
75 is our lowest cost option.
Half a point cost there.
And you can buy that down to 5.
(11:31):
625.
At a cost of 2.
5 points.
And our last option here areoutside the box solutions.
This is for the alt doc cash outrefi, the same one that is 80
percent on a purchase.
It's 75 percent on a cash outrefi at a 600 credit score.
Uh, lowest cost option is 10.
(11:53):
75 percent interest rate at acost of half a point.
And you can buy that down allthe way to 9.
875 at a cost of 2.
375 points.
So great options here at theMoody's Calculator, uh, for low
FICO score borrowers, agency, aswell as non QF.
(12:18):
All right.
Thank you, Jose.
Uh, I don't see any questions.
I think we'll wrap it up, butdefinitely some amazing options
there.
So make sure to, uh, check outall those options when you need
them.
We'll go ahead and wrap it upthen.
Remember that we do this show at11 a.
m Eastern every weekday where wego through our live rates and
then do a deep dive into adifferent loan topic So we'll be
back tomorrow with a new topic.
Thank you everybody for tuningin We'll see you tomorrow at 11
(12:40):
a.
m.
Eastern for the next episode ofdaily rates live with the
mortgage government
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