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Last updated on December 5th, 2022 at 10:05 pm
The average FICO score on closed loans reached 753 in February says the data from the most recent Origination Insight Report by Ellie Mae.
Because of the tightening of the lending standards many borrowers are worried whether their credit score is good enough to qualify for a mortgage.
Yet many buyers may be surprised by the options that are still available for borrowers with lower credit scores.
When the credit score goes up it shows that it is building a stroller’s financial future. As more Americans with strong credit enter the housing market, there is a natural increase in the FICO score distribution of closed loans.
Usually, if the credit score is below 750, people fear that they may not be able to qualify for a mortgage, but that is not always the case.
Though the majority of borrowers right now do have a score above 750, there’s more to qualifying for a mortgage than just the credit score.
According to Experian, a global leader in consumer and business credit reporting:
- FHA – Homebuyers with a 580 credit score or higher and a 3.5% down payment, may be able to get an FHA loan. And if they can manage a 10% down payment, then credit score can go as low as 500.
- A conventional loan – comes with a 620 minimum credit score.
- S. Department of Agriculture (USDA) loans – lenders require a minimum credit score of 640 for a USDA loan, though some may go as low as 580.
- S. Department of Veterans Affairs (VA) loans – even if they don’t have a minimum credit score, but lenders will require between 580 and 620.
Of course, a higher credit score will give you more options and better terms when applying for a mortgage.
Speak to an expert about steps you can take to improve your credit score when planning to buy a home so you’re in the best position possible.
Reference Source: Jyoti Justin
