Once it’s time to buy a home, chances are you’ll need to get the funding through a mortgage loan. A house is not only one of the largest investments you can buy, owning one also comes with some risks. Houses can take a lot to maintain, and life changes, sometimes unexpectedly.
When asking a mortgage lender for a loan they need to find a way to help balance out the risks of loaning a large sum of money to an individual. Home buyers who are deemed “Credit Worthy” show a strong ability towards managing their money and keeping accounts in good standing. This is a large part of what makes you credit worthy in the eyes of a lender.
Is There a Magic Credit Score Number for Buying a House?
So how do lenders know you’re credit worthy or not? One of the first places they’ll look is your credit report. Your score reveals a lot about how financially reliable you are, so the better your score, the better the loan you’ll be able to get. What does your credit score have to be to buy a house?
On average, most private lenders prefer to see scores from 620 on up. For a conventional loan you could say this is the magic number, but really, it’s just the beginning. Ultimately, the better your score the better your loan options will be. So, what if your score is below 620? If this is you, don’t count yourself out, organizations such as the FHA offer loan programs which you can get through your lender, that allow for a lower than stellar credit score. If you qualify along other basic parameters, such as income level, and current employment, owning a home with less than perfect credit is possible.
It’s still commendable and certainly recommended to strive for a better credit score before you buy a home if yours is on the lower end of the spectrum. If all other aspects apply, making an FHA loan still the ideal one for you, a higher credit score will get you better terms as credit scores also impact how much you pay for your loan in interest. This applies to conventional loans as well. The interest rate you’re offered by your lender is based in large part on your credit worthiness. A better score equals lower interest to pay, which in turn leads to a lower monthly mortgage, and possibly more home for less money out of pocket.
Before you get a loan get your credit report reviewed and corrected if needed. get the most from your credit score when buying a house. Contact us for a complementary credit score check and review. When it’s time to buy a home, work with a Realtor® who has a passion in helping their clients find solutions every step of the way. Get the conversation started with me today at 609-338-3773 or send me an e-mail. The Haviland Group and Keller Williams Realty are ready to share their expertise and care for all your real estate needs.
Financing for condos with an FHA loan can be challenge. Under the revised guidelines – which took effect Oct. 15, 2019 – an individual condo unit in a building of 10 units or more may be eligible for spot approval if no more than 10% of the units are FHA-insured. So even if a condo is not on the FHA approved list it may still be eligible for FHA financing.