Business Insider reports that Americans with lower credit scores are finding it easier to take our mortgages.
Lending standards tightened during the housing downturn. But as the housing industry continues to recover, lending standards are loosening again.
Read the article: Americans With Lower Credit Scores Are Finding It Easier To Take Out Mortgages.
First, we’re seeing lower down payments on lending: For jumbo loans (those above the conforming loan limit and that are not securitized by Fannie Mae or Freddie Mac) the downpayment is down to 10 or 15%, down from 20% a few years ago.
For conforming loans ($417,000 for single-family homes in most states), the share of loans with a downpayment under 10% hit a five-year high, according to Black Knight Financial Services.
Last week, TD Bank announced that it would take down payments as low as 3% from first-time buyers and low- and moderate-income buyers, down from 5% when the program first launched last year, report Timiraos and AnnaMaria Andriotis at The WSJ.
Second, following the housing bust, lenders had been using overlays — basically, stricter requirements — to protect themselves. But some lenders have started to ease up on these overlays. The share of FHA borrowers with credit scores below 650 rose to 20% at the end of 2013, from 15% in August.