How to Qualify for Subprime Loan

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Qualifications for a Subprime Mortgage Loan

Until early 2007, lenders made subprime loans to borrowers who had FICO scores of less than 620. But those ratios are rising in the heat of the subprime market shake-out. Borrowers who once qualified with a FICO of 620 have watched the FICO requirements move to 640 and up. Those applying for 100% financing could once qualify with a FICO of 580, but that number has changed to 620, coupled with almost double-digit interest rate pricing. Many lenders will not lend at all on 100% financing.

Borrowers with FICOs below 600 are finding it difficult to obtain financing at any interest rate.

Borrowers whose FICOs fall between 600 and 700 receive less favorable terms.

Major institutional lenders like to see FICO scores above 700, and those borrowers receive the lowest interest rates and terms.

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