FICO Scores (Fair, Isaac and Company Scores) are used primarily as guidelines. When a borrower has qualified for a loan and all necessary documentation has been sent for approval, the underwriters (financial advisors to the bank who make sure loans meet certain guidelines) will then review the loan being applied for and review all documentation. From here the underwriter will determine what other conditions are needed to fulfill the requirements for the loan. Some compensating factors that will make an underwriter more lenient toward lower FICO scores can be low debt to income ratios, larger down payments, and a great history of savings. Every situation is different so conditions for the same loan may vary depending upon income, credit score, and job stability.

It is very important to remember that FICO scores change on a monthly basis, so while shopping around for a lender, make sure that the lender pulls your credit within 14 days of all the others. Otherwise, your credit score will take a hard hit and drop at least 3 points. If the lender pulls it within a 14 day time period, your credit will not take a hit. This is very important because qualifying for a loan can be the difference between those 3 points. Thus, interest rates can rise drastically, increasing a monthly mortgage payment by hundreds of dollars. If an underwriter finds gaps between employment history and income, written documentation may be needed to explain the reason between the gaps. The underwriter carefully examines as much financial history as possible to justify why the borrower can be approved for a loan.

Moreover, it is also very important not to take out any other loans during the home mortgage approval process. New purchases, for example, whether they are new car loans or furniture loans can offset debt-to-income ratios and disqualify a loan instantly.