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Standards, Shutdowns, and Mortgage Applications

blog-standards-shutdowns-mortgage-lendersLate last month, the Washington Post published that in August there was an increase in the percentage of successful home mortgages for applicants with FICO® Scores less than 700 – up almost double 2012 percentage. Some were taking that as a sign of hope, as some lenders may have focused equally on employment and savings. But not everything was getting easier with mortgage insurance premiums increasing in certain cases. Regardless, with average FICO Scores down, lower might have been the new norm.


Unfortunately, as we entered October, the country is in a government furlough. If the shutdown is short, there hopefully will not be long-term effects. But if there is no compromise over the shutdown and it extends to weeks, this could directly impact mortgage applications. Remember, it is not just credit reports that are collected during a mortgage application, but also tax records from the IRS. As the IRS is a government agency, they are currently going through limited operations as seen on their website, Also, even with the shutdown, tax law remains in effect – please read here for more information regarding any potential effect of the IRS and the lapse in appropriations.


What this all means


-Even If you have a credit score less than 700, it doesn’t automatically qualify you for a home mortgage.


-While some applicants have received mortgages with a score less than 700, it is generally easier to acquire a home mortgage with a higher score.


-Due to the government shut down, some lenders may be facing delays.


So, if the government shutdown ends early and mortgage applications can continue to move forward, this is a great time to try to increase your credit score through paying off debt on time, reporting any errors you find on your report, and more. If you are a federal employee affected by the shutdown, contact any credit unions and lenders and ask for any information they can provide to help alleviate any issues to your credit that might surface.


Michael Cohen is the Content, Community and Social Media Manager at


About Michael Cohen

Michael Cohen is the Digital Marketing Manager for

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