Report: Mortgages become slightly easier to get as standards ease

Here’s some good news on the mortgage availability front as you house-hunt this weekend: Credit standards appear to be easing, just a bit, according to an analytical study and reports from front-line lenders.

The average borrower credit score for a closed loan dropped from 749 in January to 745 in February, Ellie Mae Inc., a provider of software to home lenders, reported Friday. Though still steep, it was the lowest average score since last May, said Jonathan Corr, Ellie Mae’s chief executive.

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The average down payment for a home purchase was exactly 20%, the report said -- the first time it’s been that low since July.

And the percentage of total income that borrowers were being allowed to devote to debt payments averaged 35% -- the highest since June, Corr said, “suggesting that the credit box may be expanding.�

Meantime, the mix of purchase versus refinance mortgages shifted toward the former, reflecting improved buyer confidence and a recent increase in mortgage rates, which dampens demand for refis. In February, 32% of all closed loans were for purchases, compared with 27% in January.

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In another sign of easing mortgage standards, a few banks are now providing home-equity lines of credit for as much as 90% of the home value, up from 80%, said Mark Cohen, a Beverly Hills mortgage banker.

That means that someone owing $350,000 on a $500,000 house might get a $100,000 credit line instead of one for $50,000 – assuming they have a minimum credit score of 720 and can fully document their ability to make payments.

Cohen said he’s also seen a slight loosening of borrower worthiness gauges such as the debt-to-income ratio. “There’s a slight credit easing, but in a subtle way,� he said.

For people with less than 20% down payments, mortgage insurance is now easier to get, said Jeff Lazerson, a Laguna Niguel mortgage broker.

And so-called delayed financing, unavailable in recent years, is back, Lazerson said -- someone who paid cash for a one- to four-unit property may be able to get back up to 75% of their money by taking out a loan right away, instead of having to wait for six months.

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