Fannie Mae Homepath Loans Updates

Fannie Mae on Thursday announced an expansion of the company’s REO program, HomePath.com.

HomePath already offers owner-occupant buyers 3 percent down with no mortgage insurance. The expansion gives these home buyers up to 3.5 percent of the final sales price to use toward paying closing costs. A home warranty also will be available.

New Minimum Credit Scores for FHA Loans

On Sept. 3, the US Department of Housing and Urban Development (HUD) released Mortgagee Letter 2010-29, Minimum Credit Scores and Loan-to-Value Ratios. Effective Oct. 4, borrowers with a credit score below 500 are not eligible for FHA-insured mortgage financing. Borrowers with a credit score between 500 and 579 are limited to 90 percent LTV, which requires a 10 percent downpayment. Borrowers with a credit score of 580 or higher are eligible for maximum financing, which requires a minimum 3.5 percent downpayment. Borrowers with nontraditional credit histories may be eligible for maximum financing.