- Check with multiple lenders to see what the minimum credit score is for a new loan.
- Most lenders look for solid income, clean credit history, and a debt-to-income ratio of 35% or less.
- FHA lenders have lower minimum credit score requirements for than traditional mortgage lenders.
BILL'S ANSWER
There is no simple answer to your question. Depending on the type of loan you are applying for, the FHA has some programs for people with credit scores as low as 580 but they are disappearing fast. Today, the minimum score for a home loan mortgage for Fannie Mae and Freddie Mac is 620. These numbers vary with market conditions.
A credit score is just one part of the equation. A mortgage lender wants three things from a potential customer: Steady income, a relatively clean recent credit history, and a debt-to-income ratio of 35% or less. Customers who qualify for a mortgage have all three of these qualities, plus a down-payment.
Start with the Bills.com resource Mortgage Basics to Know Before You Apply for a Loan. Then, go to the Bills.com mortgage saving center for no-cost, pre-screened quotes from pre-screened mortgage lenders.
Credit Report
Next, go to AnnualCreditReport.com to get a no-cost, no-obligation copy of your credit report from each of the three major consumer credit reporting companies (commonly called "credit bureaus"). Review your report and dispute any inaccurate listings.
To find out more how your credit score is calculated I recommend you read an article I wrote explaining FICO Score Calculation. This should give you a much clearer understanding of how credit scores work.
Debt-to-Income Ratio
Finally, lenders calculate and analyze your debt-to-income ratio to determine the size mortgage you can afford. See DTI: Debt-to-Income Ratio Information to learn how to calculate your debt-to-income ratio.
You should be able to qualify for a mortgage if you have a steady income, the minimum credit score for a home loan that the mortgage lenders you apply with require, and a low DTI.
I hope this information helps you Find. Learn & Save.
Best,
Bill
December 28, 2011
December 29, 2011
Cambridge, MA | November 16, 2011
November 16, 2011
Some of it will depend on whether or not your new HARP payment increases your current payment by more than 20. If so, there will be a minimum credit score of 620. However, my reading of the guidelines released so far has not found a credit score requirement for someone whose payment is not increasing by more than 20%.
More details will be coming out, as lenders and investors chew over the Fannie Mae and Freddie Mac releases about HARP. Please check back with Bills.com, as we will be following the HARP rules closely and reporting on them as they develop.
Ramseur, NC | August 01, 2011
August 01, 2011
Your debt-to-income ratio is crucial to qualifying for a mortgage and for determining what size mortgage payment you can handle, if any. Your DTI is determined by looking at your gross income, your new mortgage principal, interest, taxes and insurance costs, and your costs for certain monthly bills, such as a car payment, student loan payment, or monthly credit card required minimum payments. If you divide those monthly costs by your gross income, you come up with your DTI. In general, you can't have a DTI over 44% and qualify for a loan these days.
I suggest that you speak with a lender or three to see what you qualify for now or what barriers there are to qualifying (credit or income, for instance), so you can work on addressing them if necessary
Stafford, VA | February 22, 2011
February 22, 2011
Portland, OR | February 15, 2011
February 15, 2011
I can, however, recommend an approach to you that should help you raise your score so it exceeds the minimum credit score for a home loan. I suggest you read about the rapid rescore program.
A Rapid Rescore is just what the name implies. The borrower takes a few quick actions and then the borrower’s credit report is pulled again, usually with very positive results.
Here is how it works: The broker or loan officer will call the credit score provider and request that one of their experts review the credit report. Sometimes the borrower may also be included in a conference call. The analyst at the credit report provider gives his or her expert advice on what specific steps the borrower can take in order to raise his or her FICO. Recommended actions could include a borrower paying down credit card balances to a certain level or getting letters from collection agencies that show the debt has been paid.
Once the borrower has completed his or her part of the arrangement, the credit score provider will perform the Rapid Rescore. Most providers charge a fee for this, usually around $100 for all three credit bureaus. The Rapid Rescore takes about three days and the results are usually very positive.
If the lender you are currently working with doesn't offer the rapid rescore service, I suggest you search for a lender who does.
New York, NY | February 11, 2011
February 11, 2011
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