You’ve found the home of your dreams, you have some money saved up for a downpayment and your employment history has been steady. So far, so good. But how is your credit history? Have you ever thought about the credit score needed to buy a home?
We certainly hope you have! Obtaining a mortgage loan to pay for your home purchase can be a complicated process. Having a poor credit score can make it far more difficult.
Facts about the credit score needed to buy a home:
There are several scenarios that can put you, as a borrower, into a high-risk bracket. Here are some points that can impact your creditworthiness.
- Your credit score is below 620. That can be a real red flag when applying for a mortgage. Lenders use your credit score to determine your ability to make future payments.
- According to the real estate industry online publication Keeping Current Matters, the average FICO Score on all closed loans recently dropped to 722. The average includes both refinance and purchase loans.
- FHA and VA loans offer the greatest opportunity for individuals looking to enter the housing market with low down payments and even lower FICO Score requirements.
- Ellie Mae’s Millennial Tracker reveals that those who purchased homes in December 2017 with an FHA Loan were able to do so with an average downpayment of 4 percent and a FICO Score of 684.
Overall, it’s getting a little easier to receive loan approval with a credit score that’s not quite up to par. If you’re currently debating a home purchase and worried about the credit score needed to buy a home, please contact The Olear Team today!