Lenders are loosening the reins; what FICO score do you need to get a mortgage?

December 25, 2017 - 2 min read

FICOs drop for average buyer

It looks like mortgage lenders are loosening their credit standards a bit. According to data from Ellie Mae, November saw the average buyer FICO score drop two points over October. FICOs also dropped on refinance loans across the board.

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According to Ellie Mae’s November Origination Insight Report, the average FICO score across all loan types dropped from 724 to 722 for the month. It’s also down six points since one year ago, and nine points from last September.

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On purchase loans specifically, about 33 percent of buyers had FICO scores in the 750 to 799 range, 24 percent had scores between 700 and 749 and 20 percent have scores of 650 to 699. About 9 percent had a FICO of 600 to 649, and 13 percent had above-800 scores.

On refinances, the average FICO score dropped from 650 to 645 on FHA loans, 732 to 730 on conventional loans and 702 to 700 on VA loans.

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Jonathan Corr, Ellie Mae’s president and CEO, says lenders may be lowering their FICO requirements to draw in more refinancing activity.

“We saw FICO scores drop modestly, especially across refinances, indicating that lenders may be loosening credit standards to attract the dwindling refinance market,” Corr said. “This is certainly a trend we will continue to watch into the winter months.”

It appears this tactic is working, as the share of refinances jumped over the course of November, with refis accounting for 39 percent of all home loans last month. In June, refinances made up just 32 percent of all mortgage activity.

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Lenders appear to be loosening the reins and accepting applications with lower FICO scores. Want to take advantage? Shop around and see what rates you qualify for today.

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Aly J. Yale
Authored By: Aly J. Yale
The Mortgage Reports contributor
Aly J. Yale is a mortgage and real estate writer based in Houston who has contributed to Forbes and worked for organizations such as The Dallas Morning News, PBS, NBC, and Radio Disney.