Do I Need Good Credit To Buy A Home?

Qualify For a Mortgage

Some people may be surprised to discover that they do not need an absolutely perfect credit score to purchase a home or qualify for a mortgage. In fact, there are many cases where credit just needs to be sufficient enough to complete the loan application. As long as your existing credit rating is in line with the criteria for the property type and mortgage size involved, you may be able to get the financing that you so need to finally purchase the home of your dreams.

Here are three of the more commonly offered mortgages that are available today to homebuyers and the basic credit scores needed for each product.

FHA Loan

For an FHA loan or Federal Housing Administration loan the borrower will need at least a credit score of about 600. That said there are some lenders that do FHA loans that will lend to a potential homebuyer with a sub-600 score of as low as 580. It should be noted that with a credit score in the 500s there will be some added costs involved. In short, with a very low credit score the cost of borrowing money is more. Anytime a score is above 620 a borrower can expect less fees and better rates as well as an easier overall loan process.

Conventional Loan

Unlike an FHA loan, a conventional loan will demand a credit score of at least 620. That said a potential homebuyer with a score of 620 to 680 should expect to pay additional fees and higher interest rates as applicable. In addition, a conventional loan typically requires a larger down payment but this is not always the case. Talk with your lender to know for sure.

Jumbo Loan

A jumbo loan is a kind of mortgage product that is used to purchase higher end homes that are more expensive. For this type of loan the borrower should have at least a 680 credit score. Better yet, a 700 credit score or higher will yield better terms and rates for the borrower. Most importantly, higher credit scores usually equate to less money down.

Credit Repair

Anyone considering purchasing a home in Anacortes should check their credit score for free online to determine their creditworthiness. Anytime there are credit challenges or discrepancies it is best to resolve these issues prior to proceeding with applying for a mortgage. Good strategies include paying down debt and always paying on time. Resolving credit issues is easier than most people might imagine. There are even organizations that offer credit repair. As a note of caution not all credit repair agencies are reputable. Proceed with caution when enlisting the services of her credit repair company. An anacortes real estate purchase may be easier than expected.

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