Credit Qualifications For A Home Loan

If you are planning to secure a loan to buy a home, then your credit score is a significant factor to determine your loan approval. The credit score helps the lender to evaluate your ability to pay off the debt in due time.  It is thus important to know the credit qualifications needed to secure a mortgage to help you move successfully through the approval process. The minimum credit score, however, varies depending on the type of mortgage that you are applying for.

Credit score qualification by mortgage type

•    FHA loans usually have the lowest credit qualifications, and if you are not well up at the moment, then this type of mortgage is an ideal option to consider. For the FHA loan, the lender will require a 500 credit qualification with a 10% down payment of the mortgage.
•    USDA loan is a bit expensive and will require a minimum credit score of 640+ for most lenders.
•    VA loan has a 620+ credit score though some lenders may just require about a 580 score.
•    A conventional loan is similar to the VA loan with a minimum credit score of 620+.

Your credit score will affect the interest rate you will be required to pay during the loan repayment. Usually, poor credit qualifications attract more interest rates and this, in return, increases the closing costs prompting you to make higher monthly payments.

    If you are approved for a mortgage with a 579 credit score, you should expect a 2% higher interest rate.
    580-619 credit score a 1% higher interest rate.
    680-739 credit score will not be affected by the change in the interest rates. It is the range for many investors.
    With a 740+ credit score, you will enjoy the best interest rates from different lenders.

If you need to get your home loan approved, then you need to increase your credit qualifications. Click here for a 7 day $1 Credit Score Trial and make sure your scores will not only help you get the mortgage but also let you enjoy the lower interest rates charged by the lenders.