My husband and I have low scores upper 500s, mostly due to no credit and only a few tradelines. We want to purchase a new house, and we know we meet the FHA requirements..no lates, no bankruptcy, all collections paid, no foreclosures etc..., We have a broker that keeps steering us toward conventional my guess sub-prime loans. Any advantage to him not wanting us to go FHA when we know we qualify? Whats in it for him if we go conventional instead of FHA?
He can get you a higher debt to income ratio with a conventional for a bigger mortgage=bigger fees, there's caps on FHA, I know someone with a (yikes!) 501 mid-score who was approved for an ARM at like 7.8% interest at sub-prime and the fees were soooo high and she TOOK IT!!! Scary! If your scores are high 500's, why not wait another few months, see if you can hit 620 at least and get a lower interest rate. You're going to be quoted a high %, I bet.
FHA is more work basically. i will argue the point about higher debt ratios because FHA allows up to 49% back end ratios. have him run the numbers of the various programs for you and you decide. don't let him push you into a program that you don't want.
