What Credit Score
Do I Need
Looking for a new home? Wondering what it takes to qualify for a mortgage? Getting financing for a new home starts with your credit score.
Your credit score is the starting point for any new mortgage today, whether you are getting an approval for a FHA mortgage, Conventional mortgage, USDA, or VA, every loan program has a minimum or I should say every lender has an overlay that sets a minimum credit score.
What Credit Score Do I Need for Loan Approval
As you can see from the graph above the average credit score hovers around 680, I recently read that the average credit score for St. Louis was 690, which seems a bit high considering my experience as a mortgage loan officer. What credit score is needed for an approval will depend on the mortgage program you are applying for.
The governmental loans, FHA, USDA, and VA, for the most part don't really have credit score guidelines they just say they want the borrowers to have a credit history that can be judged by an Underwriter as not having inherent risk of payment default. It is the mortgage lender that has their own overlays to the guidelines that are determining the minimum qualifying credit score. For the governmental home loans programs I am generally seeing a 640 credit score as being average for most lenders in the St. Louis and St. Charles area.
For Conventional programs they also don't have true minimum credit scores in their underwriting guidelines but there ar lender overlays plus risk based pricing of conventional interest rates. What is risk based pricing? The more risk that is determined to be in a conventional mortgage the more stringent the underwriting and the higher the interest rate. To get the best interest rates for a conventional mortgage you need a 740 plus credit score and a 30% down payment.e
Conventional mortgages can get approvals with lower credit scores, I recently had a conventional approval with a 636 credit score but they had to have a 20% down payment. If you have low credit scores and a small down payment your chances of approval gets less and less. Keep in mind that conventional mortgages don't require a big down payment they do have low down payment programs, as low as 3% down payment, but you will need at least an average credit score.
Here is What I Can Do
I am a Mortgage Loan Officer for one of the more aggressive mortgage lenders in the St. Louis and St. Charles area, we help more people get a new home loan than any other lender in the area. Below you will find what we are looking for as minimum credit scores for some of the more popular and widely used mortgage programs.
FHA; great mortgage program with some of the more liberal underwriting guidelines, great for first time home buyer. Low down payment minimum, higher debt to income qualification. 620 or higher middle credit score of all borrowers.
We do have the ability to go as low as a 580 credit score but we will be asking for a near perfect borrower outside of the credit score. With a 580 credit score we will ask for a larger down payment and other compensating factors. For more information on how to get a mortgage with poor credit scores please follow the link to my website.
FHA 203k Renovation Mortgage; this loan program allows you to purchase a new home by financing the cost of purchasing the new home plus the cost of fixing up, rehabbing, and/or renovating your new home. If you would like more information on the FHA Renovation Mortgage please follow the link to my website. With this FHA program I will need a 640 middle credit score or higher from all borrowers.
VA; one of the best mortgage programs available, must be a qualified Veteran. 100% financing, no mortgage insurance, great interest rates. Generally, I need a 620 or higher middle credit score of all borrowers.
USDA Rural Development; another great mortgage program, this program has geographical and income restrictions. Also, 100% financing, no mortgage insurance and very low interest rates. If you want more information about USDA Rural Development mortgages please follow the link to my website. With USDA Rural Development I can go as low as a 620 middle credit score from all borrowers.
Down Payment Assistance; these are grant programs that are used along with another mortgage program. Restricted to first time home buyers and are income restrictive, if you make too much income you will not qualify. For more information on Down Payment Assistance in St. Louis, St. Charles, and Missouri please follow the link. The mortgage program will determine the credit score but I have been able to get down payment assistance plus a mortgage approval for borrowers with a 620 or higher middle credit scores.
If you are not sure of your credit scores and are looking to buy a new home now or in the future I would welcome the opportunity to provide you with a no cost and no obligation pre-qualification consultation. Since all mortgage qualifications begins with your credit score please do not go home shopping or home day dreaming without knowing your credit scores.
I recommend that you visit one of the many websites that will provide you with a copy of your credit report. But, pay for a three bureau credit report with credit scores, many of the free credit report websites will give you a single bureau credit report with no credit scores. Your request of your own credit report will not injury your credit report, you are entitled to one credit report every year. Now, that you have your credit report with credit scores you should speak with lenders to get the best mortgage situation for you.