What’s the minimum credit score you need to qualify for a mortgage? That’s a question we hear a lot from our Texas communities. Some people are asking because they’re ready to buy now and they’re worried their credit score won’t be high enough to qualify. Others are trying to plan for the future.
It’s never too early to start building good credit. The good news is, it’s also never too late to improve a poor credit history. At WestWind Homes, we believe helping buyers qualify for a home loan is one of the most important things we do.
Home ownership was the American Dream for previous generations, and it’s still a driving desire for so many Texans. Owning a home brings with it economic benefits like the ability to accumulate wealth and long-term savings over renting. For families, it’s part of setting down roots.
For children, growing up in a home means stability, traditions and family pride. For young professionals, it’s a sign of their success. For all adults, it’s both an investment and security. When people ask what’s the minimum credit score to qualify for a home loan, that’s what they’re really hoping to access.
Different Lenders, Different Standards
In a minute we’re going to give you the very lowest numbers you can have and still qualify for a home loan. First, let’s talk about some of the variations you’ll run into.
Lenders look at a lot of different factors before they decide whether or not to loan you money. It isn’t all up to your credit. They’ll weigh in your other assets, your income, your employment history, your debt and everything else about your money situation.
It gets pretty complicated. However, while there are many factors involved, your basic credit score is definitely the most important part. The way lenders see it, if you have a great salary and a ton of cash in the bank, but you don’t always pay your other debts on time, you might not pay them either.
Remember, mortgage companies are there to make money. They’ll only lend if they feel your situation benefits them. Plus, different types of mortgages have different requirements.
Scores By Mortgage Type
The Dodd-Frank Wall Street Reform became law in 2010, tightening requirements for the mortgage industry. Lawmakers supported the law because iffy lending practices caused the 2008 housing crisis. However, after the law passed, it became harder for people with credit problems to qualify for a mortgage. Now here’s the minimum credit score by mortgage type.
- FHA Loan – A score between 500 and 579 sometimes qualifies, but only once in a blue moon. Most borrowers must have a score of 580 or higher.
- VA Loan – Some lenders will loan if you have a score of 580, but most require 620 or higher
- USDA Loan – This zero down payment mortgage for rural and suburban home buyers requires a credit score of 640 or more. Some people can qualify with “nontraditional” credit references like a solid rental history and/or religious utility payment.
- Conventional Loan – Borrowers need a FICO score of 620 or more.
- FHA 203K loans – This is what you need if you’re buying a fixer-upper and borrowing money to make repairs. You’ll need a score of 620 or higher.
As you can see, for most types, the minimum credit score you need to qualify for a mortgage is 620. However, if yours is lower than that, keep reading!
Loans With Low Minimum Credit Score
FHA offers some loans where buyers can qualify with a credit score of 500 and only 10 percent down. It’s tough to qualify, but it’s possible. Also, if you have a score of 580 or higher, you might be able to qualify with only 3.5 percent down.
FHA loans are backed by the Federal Housing Administration, so lenders have a lower risk in issuing them.
Qualify for a Mortgage With Poor Credit
Remember earlier in this article how we said WestWind Homes puts a high priority on helping Texans achieve their dreams? We’ve helped countless buyers move into a brand new home, even after other builders turned them down. We can help you fix bad credit and get a home loan.
If you want to buy a new home and you’re afraid you won’t be able to get a loan, let’s talk. In many cases, we’ve helped people with some pretty serious credit issues into their own new home in 90 days or less. We’re so sure we can help that when you finish the process, we’ll give you as much as $1,000 you can use as your down payment on a WestWind Home.
Your path to homeownership starts with a free, confidential credit consultation. Then we’ll work with you to get your credit ready to qualify for a mortgage. Today could be the day you stop worrying and start moving toward your dreams when you find out more about our Home Buyers Club or get in touch with us today.
Free Confidential Credit Consultation
Since 1993, we’ve been helping families move into our beautiful homes in vibrant communities faster than they thought possible. For more information, schedule your free and confidential consultation today!