Your FICO score is the first thing a mortgage lender will check when seeing if you qualify for a loan. While there are many factors involved in qualifying for a loan, your credit score is the most important.
The minimum credit score you need to purchase a home will depend on the type of home loan you qualify for. Before the 2007-2008 housing market crash, it was much easier for people with poor credit to find subprime loans. Lenders were not as heavily regulated as they are today.
In 2010, Obama signed the Dodd-Frank Wall Street reform into law. This law tighten up the requirements in the mortgage industry and made it more difficult to qualify for a loan.
Especially people with low credit scores. Typical minimum FICO scores by mortgage type: FHA Loan – 580+ credit score (500-579 score is possible but unlikely)
VA Loan – 620+ credit score (some lenders require 580)
USDA Loan – 640+ credit score
FHA 203K Loan – 620+ credit score
Conventional Loan – 620+ credit score Minimum Credit Score Required for a Mortgage Loan Many first time home buyers believe they do not qualify, however, FHA loans have low requirements.
If you have a poor credit rating the best home loan to get is an FHA loan.
FHA loans have the lowest credit requirements of any mortgage, often referred to as bad credit home loans. In order for the FHA to insure a mortgage loan the borrower must have at least a 500 credit score with a 10% down payment.
However, getting approved for an FHA home loan with a credit score in the 500-579 range is very difficult, even with 10% or more down. It’s highly recommended you follow the advice in this article to improve your credit before applying for a mortgage.
If you have a 580 or higher FICO score you will just need a 3.5% down payment. Getting approved for an FHA mortgage with a 580+ score is much more likely than if your score was below 580.
Search For Homes in Dallas
To search for a home in Dallas Texas contact me today by calling (972) 523-1389 or click here.