Credit Score to Buy a Home
Most first time home buyers wonder about what they need as a credit score to buy a home.?
Of course the only time you need to wonder about what credit is needed is if you plan to purchase a home using a loan.?
Because lenders want to protect their investment as much as possible, they look for how you have handled debt in the past. The better your credit score, the more statistically likely it is that you will not default on the loan. So, they will give you a better interest rate – and a lower monthly payment – for your higher score.?
I have an important warning if you are attempting to increase your score before purchasing. While you increase your score, interest rates or prices may increase. This means your credit score may jump due to your good efforts, but your monthly payment may jump too.?
A Score of 580 is the Minimum
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The absolute minimum credit score to buy a home is often 580… A 580 score is the minimum required for an FHA loan. FHA loans are loans that are backed by the government (Federal Housing Administration). These loans are very common among homebuyers?
If you are currently below a 580 credit score, it’s a good idea to work with a credit repair professional. In most cases, credit repair companies can help you increase your score faster than what can be accomplished on your own.
Better Terms Start at 640
Once you are over a 640 score, you can qualify for a conventional loan. These are loans provided by banks. They have more lenient terms as far as the condition of the home you are purchasing. Because they don’t have as many restrictions on what types of homes you can buy, the conventional loan often helps you compete better to buy less expensive homes. Conventional loans are required for higher purchase prices.?
A 740 Score is Top-Tier Pricing
If you are looking for top-tier pricing, a credit score of over 740 will get you among the best rates available to buyers. Once you are above 740, the difference in higher scores is not big. A buyer with an 800 score does not receive a drastically better rate than someone with a flat 740.
Consult with a lender who can review your credit by calling Myron Chamberlain at 480-358-7801. Or give me a call to discuss your situation at 480-639-9640. I can give you an idea of the current trends in interest rates and prices so that you can make the best decision for yourself.?