Ready to buy a home but not sure what home loan program is right for you? Don’t sweat it. This is where a mortgage lender like Fairway of the Carolinas comes in. Our experienced mortgage advisers have a keen understanding of the loans that will be the best fit for your unique situation. And one of the biggest factors in finding the loan most suitable for you is your credit score. Based on your credit score, you will be a candidate for some types of loans but not others. Up next are five of our most popular loan programs — and the minimum credit score required for each.
Conventional Loans
These are loans not created by a government entity. Also known as conforming conventional loans, they simply “conform” to the guidelines put in place by Fannie Mae and Freddie Mac. A conventional loan also involves borrowing no more than $548,250. Minimum credit score: 620.
USDA Loans
Insured by the federal government, USDA loans are limited to certain “rural” areas. However, these areas are often near more urban areas. Since this loan is one of the few that requires no down payment, it is known for its affordability. Therefore, it tends to be popular among first-time buyers. Minimum credit score: None officially, but most lenders will require 640 or greater.
FHA Loans
Also backed by the U.S. government, FHA loans offer flexible qualification guidelines that help buyers who may not qualify for a conventional mortgage. This flexibility enables lenders to provide home loans with down payments as low as 3.5% of the purchase price. Minimum credit score: 500 (with 10% down) or 580 (with 3.5% down).
VA Loans
The U.S. Department of Veterans Affairs (VA) provides this affordable home financing option for service members, veterans and their surviving spouses. Fairway’s minimum credit score for VA-loan eligibility is just 600 — less than the 620 required by many other lenders. For more about VA loans and the various benefits they entail, click here.
Jumbo Loans
Available for home purchases over $548,250 and up to $2,000,000, jumbo loans require a higher credit score than pretty much any other loan you’ll ever find. Minimum credit score: 680.
The Wrap
Two factors will ultimately determine whether your credit score is good enough for a home loan. Those factors are: No. 1) the type of loan you’re seeking and No. 2) your mortgage company. Ultimately, though, whether you qualify for any particular mortgage loan is at the discretion of your lender.
If you’re concerned about your credit score being too low, ask your Fairway of the Carolinas mortgage adviser about our internal Creditool team. These highly qualified credit analysts will assign someone to your credit report and draft a credit improvement action plan just for you. The best part? It’s free. Also be sure to check out these three tips for raising your credit score.
