More than five million pre-existing homes were sold in 2020. Most of these homes were purchased using a mortgage. So, if you’re trying to find the right mortgage to buy a home, you’re in good company.
One of the most common questions potential homebuyers have is what’s a good credit score for a mortgage application. The answer to this question isn’t singular because multiple mortgage options exist. Each of these has its own minimum requirements.
What’s a good credit score for each available home loan type? Continue reading to find out.
How Are Credit Scores Determined?
Credit scores are complicated because they use a lot of different information. On-time payments, the percentage of available credit used, and the age of your loans are all factors. There are also a few different types of credit scores, so it could vary from one type to the other.
If you want to raise your credit score, you’ll want to make sure all your payments are made on time. It may also help to increase your available credit or pay down any balances.
Credit scores range from 350 to 850. If you have a low score, credit repair can help. These services help improve certain factors of your credit report and overall score to raise it high enough for a mortgage.
Conventional home loans have a minimum requirement of at least 620. These are generally the strictest mortgage types to apply for and often leverage numerous other qualifications. Thankfully, there are a few different options available for those with lower credit scores or no credit at all.
A VA loan requires a minimum credit score of 580. It is an excellent option for veterans or active-duty military personnel. However, you or a spouse must currently or previously have served in the United States Armed Forces to qualify.
Also read: HDFC Credit Card Application Status Online
FHA loans are backed by the Federal Housing Administration and require a minimum credit score of 580. These loans are usually the easiest to qualify for since they’re most inclusive. Not only do they require a lower minim credit score than conventional loans, but they also have lower down payment requirements.
USDA loans are backed by the government and can be applied to homes outside of high population areas. This may be an excellent loan choice if you’re looking for a home in a rural area or small town. The minimum credit score requirement is 620.
USDA loans have the added benefit of not requiring a down payment. If you have decent credit but no significant savings, a USDA loan may be the right choice. Additionally, these loans generally have low-interest rates.
A Good Credit Score for a Mortgage Application Varies
A good credit score for a mortgage application varies on which home loan you’re trying to get. Generally, you’ll want a minimum credit score of 580 before submitting any mortgage applications. If you still have questions about mortgages or credit scores, check out our other blogs to learn more.