What does my credit score need to be to buy a home?
The minimum credit score needed to buy a house isn’t set in stone and in fact, it can change quite often especially during and after a recession when the economy is on a downturn. It’s not unusual for lenders to enforce tighter restrictions on borrowing when the economy is shrinking instead of expanding. In the wake of the housing collapse, for instance, applicants with credit scores of 720 and above were getting rejected for mortgage loans.
Fortunately, the real estate market has improved dramatically since 2008 and lenders have eased up a bit in terms of the minimum credit score they’re looking for. The minimum score also depends on the type of loan you’re applying for.
With a conventional loan for a house that’s backed by Fannie Mae or Freddie Mac, for example, the minimum score required is set at 620. But the lowest credit score to buy a house with an FHA loan is 580.
Keep in mind, however, that individual lenders may raise the bar higher based on other factors, such as your income or how much of a down payment you’re putting down. That also affects your interest rates. As a generalization, the average credit score to buy a house is 600 or above.
For more information on credit scores or financing, contact Alliance Mortgage, your #1 source for home loans in New Orleans and preferred lender of Kelley Levy.