Bill Rapp here with the Heartfelt and Hot in Houston Blog, and this is our newest segment: Credit Score for house?
You need a credit score of at least 620 to buy a house with a conventional mortgage.
* A good credit score to buy a house is at least 620.
* However, home loans backed by the US government will grant mortgages to buyers with credit scores as low as 500.
* Mortgage lenders will also consider your debt-to-income ratio when you apply for a loan. These two factors help determine the interest rate on your loan, and ultimately, your monthly payment. Credit Score for house?
If you're borrowing money to buy a house, your credit score will likely influence how much you end up paying to your mortgage lender every month. A credit score is a three-digit number that indicates your riskiness as a borrower. A good credit score is usually anything above 670, depending on the credit-score model, which generally means you can be trusted to repay borrowed money on time. Credit scores range from 300 to 850. When you apply for a mortgage, lenders will evaluate your credit score to determine whether they want to lend you money at all and how much they'll charge in interest if they do. A higher credit score will usually yield better loan terms than an unfavorable credit score, leaving you with a more affordable monthly mortgage payment. Credit Score for house?
What is a good credit score to buy a house?
A good credit score to buy a house varies depending on the type of mortgage you're applying for, but generally you need a credit score of at least 500. In order to qualify for a conventional mortgage — a loan backed by a private lender, not a US government agency — you need a credit score of at least 620, according to the Lenders Network. The higher your credit score, the better chance you have of securing a lower interest rate. Conventional mortgages require a down payment of at least 3% of the purchase price, however, and any down payment below 20% will also require private mortgage insurance. If you have a lower credit score, a government loan may be more suitable. The Federal Housing Administration (FHA) loan allows buyers with a credit score of 580 or higher to put down just 3.5% of the purchase price of a primary residence. Buyers with a credit score between 500 and 579 may also qualify for an FHA loan, but the minimum down payment is 10%. Credit Score for house?
Mortgage lenders also look at your debt-to-income ratio
Your credit score isn't the only factor lenders consider when you're applying for a mortgage. Lenders will also calculate a potential borrower's debt-to-income ratio to determine whether they're suited to take on another monthly payment. You can find your debt-to-income ratio through a simple calculation: Divide all monthly debt payments by gross monthly income and you have a ratio, or percentage (once you move the decimal point two places to the right). The lower the percentage, the better you look to lenders, because it indicates your debts make up a smaller portion of your earnings. A debt-to-income ratio of 43% is considered the cutoff for a qualified mortgage, according to the Consumer Financial Protection Bureau, but smaller lenders and government lenders may make exceptions. Credit Score for house?
That is all for today folks from the Heartfelt & Hot In Houston Blog, make it a great day!
The inspiration for today’s edition came from this original article: https://www.businessinsider.com/what-is-a-good-credit-score-to-buy-a-house
If you are seriously considering moving right now you need to take action right now and talk to a reputable Real Estate & Mortgage Broker today, please call 281-222-0433 or visit: