One of the most frequently asked questions we get asked is what credit score is needed to buy a home? As with any other question related to home buying, there is no easy answer. While a low credit score won’t necessarily preclude you from buying a home, the credit history that shapes your credit score will definitely impact what loan programs may be available and ultimately, what home you can afford.
When you apply for a home loan, one of the first things a lender will do is pull your credit report and corresponding credit score. Lenders look at your credit score and how “deep” your credit history is – how many open credit lines do you have, how long has each been open, and have there been any negative reports? Even if you’re potentially eligible for a home loan, your credit score still plays a significant role in determining what loan programs and interest rate you could get.
So what score do you actually need to get a mortgage? It’s obvious that the higher your credit score, the better your chances for getting approved. For many lenders, a credit score of 640 and above opens up the most loan options, including FHA and conventional loans. However, to qualify for the best loan program and the lowest interest rates, you’ll need a score above 700.
Also, it’s important to note that while good credit can put you closer to loan approval, other factors such as overall debts and job history play an important role as well.
To learn more about credit scores, the website www.myfico.com offers great tips and additional information. Good luck in your home buying journey and keep an eye out for our future blog post in how housing counseling can help buyers with less than perfect credit.
