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Consumers who are trying to obtain a home loan these days, regardless of whether it’s backed by the federal government, will likely have a hard time doing so unless they have sterling credit scores and the ability to make significant down payments.

New data from the tech firm Ellie Mae shows that the average credit rating and down payment for a home loan applicant in February is significantly elevated from what has long been considered traditional levels, according to a report from the Los Angeles Times. In February, the average consumer who was approved for a traditional, unbacked home loan had a credit score of 764, and was prepared to make a down payment of 22 percent of the value of the property.

Many consumers may find this troubling for a number of reasons, the report said. First, the median credit score nationwide is just 711, meaning that the average person couldn’t qualify for a home loan under these standards. Second, the White House recently proposed a minimum 20 percent down payment, which many saw as being controversial because that was too high.

Meanwhile, those who were rejected for traditional financing carried average credit ratings of 732, and were prepared to make down payments of 19 percent of a home’s value, the report said.

Standards were not significantly more relaxed for home loans backed by the Federal Housing Authority, which is designed to help consumers with rockier borrowing histories obtain mortgages, the report said. The average FHA-backed application that received approval carried a credit rating of 701, and a down payment of 5 percent, well above the minimum 3.5 percent mandated by the agency. And the average rejected FHA application had a credit score of 666, and down payment of 6 percent. Fannie Mae and Freddie Mac—the two government-controlled home loan backers—traditionally only require a credit rating between 620 and 640 to obtain a prime mortgage.

It seems that the single largest determining factor in deciding whether consumers are creditworthy isn’t their having a credit score north of 650, as it often was in the past. Rather, lenders are requiring more significant down payments as a means of making sure that they are not exposing themselves to as much risk when granting a significant line of credit.

Image: tom stovall, via Flickr.com

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