What is the Credit Score Needed to Buy a Home?
Buying a house is not easy. There are so many factors that go into it, including usdaus and down payment. If you’re looking for an answer to the question “What credit score do I need to buy a house?” then this article is for you! We will talk about what credit scores are needed by different kinds of mortgages. The Moreira Team will help you to get pre-qualified for the loan that fits your credit profile.
The best way to start house hunting is by checking your credit. If you are looking for an apartment or refinancing, it is important that the lender trusts you and can make sure that rates are affordable. The sooner we know what kind of rate we qualify for, then the easier everything will be from there!
What Does My Credit Score Need to Be to Buy a House?
It is important that you know the kind of credit score your lender will be looking at before beginning the house-hunting process. They look for various factors to determine what rates a borrower qualifies for and if they should sanction their loan application.
Lenders may want to know about your income, how much debt you have, and what the debt-to-income ratio is. They will also ask about your savings. They might also find out if you owe any debts such as unpaid student loans or medical bills that can affect your financial stability.
What are our individual credit scores? It would be wise to look at how we can improve them. So, what does my credit score need to be to buy a house? Well, we can explore this more and talk about your FICO score requirements based on the type of loan you are seeking.
Credit Score Needed to Buy a House by Loan Type
A credit score is a measure of how likely it is that an individual will repay their debt. A higher credit score means the person is more likely to make on-time payments and have lower chances of defaulting on their loans, which in turn determines what interest rate they can be offered. The types of loans available will have different FICO credit score requirements:
FHA loans need a minimum credit score of 580. But, if your credit score is not that high, and you can put down a 10% down payment, your credit score can range between 500-579 to qualify.
The USDA Home loan requires a credit score of as low as 580 but a 640 FICO score will get you a better rate usually. The USDA Home loan has a lower interest rate which can be attractive for low credit score applicants. There are certain requirements to meet to be considered eligible for a USDA home loan and you can check it through the USDA eligibility map.
Conventional loans require a credit score of 640 for those with no existing mortgage and 670 for those who are refinancing an existing home loan in Florida.
Keep Your FICO Credit Score Up During the Process
When you are financing a home, you want to do everything in your power to keep your FICO credit score as high as possible. This will help ensure that you are approved for the best rates and terms available on a mortgage loan.
Some things to avoid are high credit card balances, late payments, and many inquiries on your credit report.
Some of the things you might want to do are pay your bills in full each month and take care not to apply for a lot of new credit accounts at once.
FHA, VA, and unconventional mortgages have different standards for credit score. If you’re looking to buy your first home or refinance an existing mortgage, speak to The Moreira Team today. We will help you understand what type of loan is right for you based on your credit score and needs.