Even as the housing and mortgage markets are stabilizing, many borrowers with good credit remain shut out of the home-loan market or saddled with a new array of fees and extra costs.
Lending standards may have loosened since the end of the Great Recession six years ago, but mostly for buyers with excellent credit scores of more than 700, analysts say.
Borrowers with minor credit dings, or down payments of less than 20 percent, still can’t get access to federally backed loans once considered mainstream. Lenders are instead routing them into higher-cost Federal Housing Administration (FHA) mortgages, designed for low-income or bad-credit borrowers.
The cost of such FHA loans has also jumped, with hiked upfront fees for private mortgage insurance and monthly insurance payments that now are locked in for the entire loan period — regardless of the borrower’s payment record or escalating home equity.