Are you looking to buy a home but unsure if you have the credit score to get a mortgage? You’re not alone! This is a common question buyers have before they start house hunting.
To help you clear any confusion, this is everything you need to know when it comes to credit scores and mortgages.
Minimum Credit Score to Get a Mortgage
Getting a mortgage with a 500 credit score is possible. Though a higher credit score will give you lower interest rates and more mortgage options, it’s possible to have a score in the 500s and still qualify.
To have the most loan options, a score of at least 620 is what you should aim for.
Credit Score for a Conventional Loan
Conventional loans are commonly used for home buyers. They’re loans that are back by government agencies with “conforming” and “non-conforming” loans. Conforming conventional loans follow the traditional lending rules set forth by the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation.
Non-conforming loans offer greater flexibility surrounding the lending rules.
The average credit score to get a mortgage with a conventional loan is 756, but you can still get this loan with a 620 score.
Credit Score for FHA Loan
Federal Housing Administration (FHA) loans are the most flexible in credit scores. If your score is on the lower end (in the 500 range), your best bet is an FHA loan.
If your score is above 579, you’ll qualify for a down payment of as low as 3.5%. If your score is below 579, your down payment will be closer to 10%.
You can learn about other options to limit your down payments by exploring seller financing.
Credit Score for VA Loan
Loans through the Department of Veterans Affairs (VA) don’t require a minimum score to qualify. These loans are open to all veterans, active-duty military members, or spouses.
But, lenders may set minimum qualifications for credit scores. These minimums vary depending on the lender, but generally, you can qualify with a score of 640 or higher.
Credit Score for USDA Loan
Loans through the U.S. Department of Agriculture (USDA) are like VA loans. They also don’t have a minimum score set, but lenders may set their own requirements.
If your score is 640 or over, you should qualify.
Credit Score for Jumbo Loan
Jumbo loans allow for a large loan limit, making it bigger than conforming loans. Because of the larger loan limit, you’ll need a higher score for a jumbo loan.
Most lenders require at least a 720 credit score. But, you’ll have the most jumbo loan options with a 740 or higher credit score.
Now You Know the Credit Score You’ll Need for Your Mortgage
As you can see, the credit score to get a mortgage varies. The good news is that you don’t need a crazy high score for mortgages. But, your score will likely play a role in the amount of interest you have.
Specific loans will require certain scores, but there are many different loan options. If you don’t have the credit score for the type of mortgage you want, it may be best to wait and build your score before buying.
For long payments like mortgages, it’s always better to be safe than sorry!
And for more financial help, don’t miss out on the rest of our blog. We have a ton of other helpful articles related to finances and loans that you’ll love!