Do you know the answer to this question? If your answer is “No” realize you are not alone.
If you are thinking of purchasing a new home or refinancing your existing mortgage it is Tremendously important to know what the minimum credit score requirements for mortgages.
If your credit score is to low you probably will not get approved for a mortgage loan. Your credit score will not only have an effect on being approved but also on what interest rate you will pay. The Higher your credit score the lower your interest rate will be.
Minimum Credit Score Requirement for Mortgage Loans:
FHA : Minimum credit score “typically” is 640 with most lenders. There are a few lenders out there that say they will go down to 580 but I have yet see or hear of one closing.
VA: Minimum Credit score “typically” is 640.
USDA: Minimum Credit score “typically” is 640.
Conventional: Minimum Credit score is 680.
Mortgage lenders go off of your “Mid Score” which is the middle of 3 credit scores; example if your credit scores are 646, 687 & 669 the lender will use 669. If you by chance only have 2 credit scores they will go off the lower of the 2 scores.
I would advise you to shoot for a credit score of 740 or above that should be your goal. The higher your credit score the less the risk the lender assigns to your mortgage and the better your interest rate.
The banks / lenders use your credit score to assign a “risk” to you mortgage. When lenders analyze / underwrite mortgages your credit score is a major factor in loan approval. Your credit score not only impacts the interest rate you pay but also the maximum loan to value for your loan.
With the current changes in lending it is very likely that lender criteria will require higher credit scores in the future. So be prepared and work on increasing your credit score.
I would suggest checking into your credit score several months in advance of wanting to buy your new home. A web site that I recommend is creditkarma.com it is a free site and they do not ask for credit cards. They also give you FREE credit scores!
I would suggest checking your credit every 4 – 6 months to make sure it is accurate. If you have a lender/bank pull your credit then your score will take a “hit” of 5 – 7 points to your credit scores. But going into CreditKarma.com and pulling your credit report will not reduce your credit score.
If you have any questions on this or if you are ready to see about a new mortgage give me a call!
NMLS # 245378, Mo 10-1649-MLO, Ks 0009720