Two routes, not one
Every file goes one of two ways. It is either scored by an automated system — for an FHA loan, the TOTAL Mortgage Scorecard, run through Desktop Underwriter or Loan Product Advisor — or it is manually underwritten, meaning a person reads it against the handbook.1
The belief, and what is wrong with it
The belief is that below some score — usually 580 — a file automatically becomes a manual underwrite. It does not. Files in that band are submitted to the automated systems like any other, and in our experience a good many of them come back approved. That is where we start every file, whatever the score reads.
It matters because the belief does real damage. A borrower told “your score means manual underwriting” hears “harder, slower, probably no” and often stops there, without anybody having submitted the file to find out.
Not a harder standard — a human one. Instead of an engine returning a refusal, an underwriter reads the file: what happened, when, what has changed since, and what the rest of the picture shows. It takes longer and it asks for more documentation.
On the right file it is the difference between a loan and a no, which is why having it available matters even when it is not needed.
What sends a file to manual
Not the score by itself. What sends a file across is usually something specific in it — a pattern of recent late payments, disputed accounts above a threshold, an income structure the engine cannot read, or a credit event inside its window.1 Those are conditions, and a condition can often be documented, corrected or waited out. A score cannot be argued with; a condition can be worked.
The question worth asking your lender
Two of them, actually, and they are short:
- Did you submit it, and what did it return? An answer of “we did not bother because of the score” is an answer about the lender.
- If it referred, what referred it? There is almost always a reason more specific than the score, and it is the reason that tells you whether anything can be done.
Both are also worth asking of anybody who has already declined you. A decline that never went through an engine is not a decline by FHA — it is one company deciding in advance.
Sources
These references support the factual explanations above. Where this page states a preference rather than a fact, it says so — those are our editorial judgement, not a claim that any one channel always costs less.
Next
What a 500–579 score costsIt changes the down payment and it shortens the list of lenders. It does not end the conversation.Start with a broker. Then vet the broker.The structural advantage is real. It is not automatic, and not every broker works it.Bring us the hard part
Whatever you have — a decline letter, a discharge order, a date you are not sure of. We will tell you honestly where you stand, including the version where the answer is to come back in six months. That conversation is free and it is not an application.