Mortgage lenders look at several factors when determining your interest rate and terms. Your credit score is one of them, and it’s an important factor for lenders because they need to know if you pose a risk for them. That being said, a low credit score doesn’t necessarily mean you can’t buy a house. But the higher your credit score, the more favorable your mortgage terms are likely to be.
What Credit Score Do I Need?
Typically, mortgage lenders are looking for a credit score of 620 or above, and scores in the mid-700 range will help you get the best rates and terms. The minimum credit scores can vary depending on lender requirements and the loan type, but are generally:
- Conventional loan – 620
- FHA loan (with 3.5% down) – 580
- VA loan – 580
One of the benefits with working with Reliant Home Funding is that we offer free credit counseling. We have helped countless borrowers qualify or get a better rate through our free credit counseling. Contact us today to get started!
Improving Bad Credit or a Lack of Credit
Securing a mortgage typically requires a healthy credit score but you’re not without options if you have bad credit or no credit at all.
If your credit needs work, you do have the option of finding a co-signer with a better credit score. Just keep in mind that the co-signer will take on the bulk of the risk and it’s important that both sides agree to the arrangement.
The best option, though, is to work on your credit and improve your score before applying for a mortgage. Focus on paying down debt and paying your bills on time. You’ll be surprised by how quickly your score can improve.
We’re Here To Help
At Reliant Home Funding, we know that credit score barriers can be frustrating, but we also know that future homebuyers like yourself are resilient and capable. Contact our experts to discuss credit-building strategies and mortgage programs. Homeownership is within your grasp.