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When there is only one borrower, the single applicable score used to underwrite that borrower is the “representative” credit score for the mortgage.
If my dh makes 50000. a yr before bonus
An I make 28000. before bonus
But I have the higher credit score, Can I get the home loan useing my score but based on our total yrly income?
whenever there is 2 borrowers....or 3borrowers...REGARDLESS of who makes more...the lowest representative score is used.
SOME lenders may use the primary wage earner, but that varies with products. I know some ALT-A products took the primary wage earner, but ALT-A loans are almost extinct.
David....I dont know when you were in the mortgage industry, but I do this EVERYDAY. I deal with many lenders, and run scenarios with AU every single day.
I speak to Underwriters trying to figure out solutions for a mortgage EVERY DAY.
There's been some differing info posted into this thread, and some direct quotes from underwriting guidelines. However, I believe many of the posts were not clear in that they applied to a specific type of underwriting or guideline.
There's plenty of lenders out there, and plenty of ways to qualify someone.
First, most A-paper loans are run through an automated underwriting system. The loan officer can do this themselves. These automated programs consider the credit scores, and credit history of all borrowers as a whole. I've seen people with scores as low as 550 qualify for this a-paper loan ("approve/eligible"). However, some lenders may still implement hard coded guidelines to overrule this finding, although that is rare. They do however quite often look at scores when it comes to pricing, ie. what rate you can get.
The next level of loans is what many call Alt-A loans. They can be called anything, but they are best defined as loans in between A-paper and Sub-prime loans. These are basically any loan that doesn't fit within "conforming" guidelines. These can be jumbo loans, pay option arms, etc... These loans typically have a set of guidelines regarding credit score, and which one you use. The guidelines tend to be consistent, but definitely vary from lender to lender regarding who's credit score is used.
Then the final level is Sub-prime loans. These loans tend to use the middle fico score of the primary wage earner. In the past sub-prime loans had very competitive rates, and in many situations offered a better rate than A-paper. With the recent meltdown, sub-prime rates have actually become what they should be based on the risk.
So, in closing... If anyone tells you that they "always" use the primary wage earners credit score they are wrong. If anyone tells you that they "always" use the lowest fico (or middle fico) of all borrowers on the loan then they are also wrong.
There are many consistencies across the lending industry, but every client is different. If you are not in the cookie cutter scenario, great credit, income, equity, and proper loan amount... then it's best to invest some time shopping around for a program that fully benefits you.
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