Mortgage lenders are battling economic uncertainty by raising minimum credit scores, requiring higher down payments, triple-checking employment status and even eliminating certain loan types altogether.
As job loss reached staggering heights due to the coronavirus pandemic (more than 16.8 million workers have filed jobless claims in the past two weeks), fear strikes deep among lenders worried that high unemployment numbers will translate into mortgage defaults and late payments down the road.
Lenders handpick low-risk borrowers as bulwark for cratering economy
Chase recently announced that it would raise its minimum credit score requirement to 700 and hike the minimum down payment up to 20 percent, from 3.5 percent. Lenders large and small across the country are following suit.
Wells Fargo and US Bank both adjusted their minimum score requirement to 680 (including for FHA and VA loans, which typically feature lower credit-score requirements as low as 580), while Flagstar Bank upped its minimum to 640.
Better.com temporarily stopped offering FHA loans, while also increasing its minimum FICO score for borrowers. They’re still offering jumbo loans; however, they no longer lend to anyone with higher than an 80 percent loan-to-value (LTV) on jumbos.
Navy Federal Credit Union also stopped offering FHA loans, with the hopes that they will resume that product in early 2021, “but that’s not fully confirmed at this point,” said a spokesperson for Navy Federal Credit Union.
read more at: https://www.bankrate.com/mortgages/requirements-tighten-with-coronavirus-job-losses/