Your credit score plays a big role in the purchase of your home! It shows how you handle debt and how you keep up with payments. Wondering what credit score do you need to purchase a home? Let’s find out!
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Credit Scores and Purchasing a Home
Having a good credit score to buy a house makes the entire process easier and more affordable – the higher your credit score, the lower mortgage interest rate you’ll qualify for. Though higher credit scores are considered more favorable for lenders, it’s still possible to get a mortgage with less-than-ideal credit. It all depends on the type of loan you’re applying for!
Conventional – To qualify for a conventional loan, you’ll typically need a credit score of at least 620. But borrowers with credit scores of 740 or higher can make lower down payments and tend to get the most attractive conventional loan rates.
Higher credit scores are considered more favorable for lenders.
FHA – If you have a lower credit score you might want to consider an FHA loan. This loan is insured by the Federal Housing Administration. The minimum credit score for an FHA loan is 580. You can also put down as little as 3.5% with an FHA loan.
VA – A government-backed VA loan might be an option for you if you’re a veteran or qualified servicemember or spouse. 100% loan, different lenders can have different credit score cutoffs. But a 620 score is a pretty good barometer for many VA lenders.
Credit Score requirements all depend on the type of loan you’re applying for.
USDA – Another government backed loan is a USDA loan. This loan would work for you if you are looking to live in a rural area and your income falls below 115% of the area’s median income. Most lenders require a minimum credit score of 640 for a USDA loan.
If you’re unsure what loan is right for you, your lender can help you decide! Interested in starting your home buying process? Click here for a free consultation!