Ellie Mae from Origination Insight Report says the average FICO® score on closed loans reached 753 in February.
Lending standards have become a little less flexible recently, so you may wonder if your credit score is high enough to get a loan for your new home.
Stricter lending standards could be a challenge for some, but many buyers may be surprised by the options available for those with less than perfect scores.
Most Americans have seen their credit score go up in recent years. A rising score means a stronger financial future. This has resulted in a natural increase in the FICO® score distribution of closed loans, as shown in the graph below:
Don't worry if your credit score is below 750. There’s more to qualifying for a mortgage than just the credit score, and there are still options that allow people with lower scores to buy their dream home.
Here’s what Experian, a global leader in consumer and business credit reporting, says:
Federal Housing Administration (FHA) loans: “With a 3.5% down payment, homebuyers may be able to get an FHA loan with a 580 credit score or higher. If you can manage a 10% down payment, though, that minimum goes as low as 500.
”Conventional loans typically come with a 620 minimum credit score.
”Department of Agriculture (USDA) loans in general, lenders require a minimum credit score of 640 for a USDA loan, though some may go as low as 580.”
“VA loans don’t technically have a minimum credit score, but lenders will typically require between 580 and 620.”
A higher credit score will give you more options and better terms when applying for a mortgage. When planning to buy a home, speak to an expert about steps you can take to improve your credit score. Don’t rule yourself out if your score is less than perfect – today’s market is still full of opportunity.
Don't know what your credit score is? You can get a free credit report from the three major credit bureaus (Experian, Equifax and TransUnion) by going to AnnualCreditReport.com.
Don’t let assumptions about whether your credit score is strong enough put a premature end to your homeownership goals. Contact VIP Realty today to discuss the options that are best for you.
At VIP Realty, we have helped thousands of people achieve their dream of homeownership. Greg & Evan Skinner take pride in the relationships they build while working relentlessly on their client's behalves selling commercial, industrial and high-quality residential properties.
The information contained, and the opinions expressed, in this article are not intended to be construed as investment advice. VIP Realty does not guarantee or warrant the accuracy or completeness of the information or opinions contained herein. Nothing herein should be construed as investment advice. You should always conduct your own research and due diligence and obtain professional advice before making any investment decision. VIP Realty will not be liable for any loss or damage caused by your reliance on the information or opinions contained herein.