Homebuyers are submitting more offers than ever. There were six million houses sold in February 2022.
After months of struggling through lockdowns, a home is starting to seem within reach. You just have to get the credit score you need and submit an offer. With that hurdle crossed, the process of buying a house is just around the corner.
Before you get too excited, though, take a minute. Keep reading to learn the necessary credit score to buy a house.
At Least 620 for a Conventional Loan
A conventional loan is a loan that is not backed by the government. These loans are available from most lenders and can be used for a variety of purposes. This includes buying a home, financing a home, or taking out a line of credit.
You will also need to have a debt-to-income ratio of no more than 43%. This means that your total monthly debt payments should not be more than 43% of your gross monthly income. You also need to show that you have enough money saved up for a down payment.
A higher credit score will give you even more loan options and better terms. If your score is 760 or above, you’ll qualify for the best interest rates available from most lenders. This guide on doctor mortgage loans, for example, offers a special program available through certain lenders. There are as well other mortgage loans for everyone else.
At Least 580 for a Federal Housing Administration Loan
The Federal Housing Administration (FHA) is a government organization that provides mortgage insurance on home loans. This is available to first-time home buyers as well as repeat home buyers.
This is one of the lowest credit score requirements of any type of loan. It makes it a good option for those with less-than-perfect credit.
It requires a lower down payment than most other loans (3.5%). It also has more flexible credit requirements. This means that more people can qualify for this loan.
Borrowers with credit scores below 580 may still be eligible for an FHA loan. They will be required to put down a larger down payment (usually 10%).
At Least 580 for VA Loan
If you’re looking for a VA loan, you’ll need to have a credit score of at least 580. This is because VA loans are given to those who have served or are currently serving in the military.
To get a VA loan, you’ll need to have a good credit score so that the lender knows you’ll be able to make your payments on time. A credit score of 580 is considered to be good, and it will likely get you a VA loan with a good interest rate. If you have a lower credit score, you may still be able to get a VA loan, but you may have to pay a higher interest rate.
Understanding Your Credit Score to Buy a House
Now that you know the necessary credit score to buy a house, you can begin working on improving your credit score if it is not where it needs to be. A good credit score will not only help you get approved for a mortgage, but it will also help you get a lower interest rate on your loan. With a lower interest rate, you will save money on your monthly mortgage payment.
For more informative articles, check out the rest of our website!
