There are a lot of things to think about if you’re considering buying a house. Before you rush into applying for a mortgage, it’s a good idea to think about how your credit looks to a potential lender. One of the questions you may want to ask is “What credit score do I need to buy a house?”
Can You Get a Mortgage with Bad Credit?
The better your credit history and down payment, the better your chances of getting approved for a mortgage with the best interest rates. It’s possible to get a mortgage with bad credit, but the rate and terms aren’t likely to be very good.
The credit score you need to buy a house can vary from one lender to another. It can also vary depending on the type of mortgage you are applying for.
Types of Mortgages
There are several different types of mortgages. Different categories may have different credit score requirements. Examples of loan types include:
- Conventional – This is the most common type of mortgage. Conventional loans are one of the more common mortgage loans these days. Unlike other mortgage loans, Conventional loans are not typically secured by a government entity. Conventional loans are available through private banks, credit unions, banks, and other mortgage companies. You usually need a credit score of at least 620 to be approved for a conventional mortgage.
- FHA – These loans are targeted to low to moderate-income buyers. You may be able to obtain an FHA loan if you have a credit score of at least 580 and a 3.50% down payment. If you’re able to make a 10% down payment, you may only need a credit score of 500.
- VA – these loans are geared to veterans buying homes. There’s no set minimum, but most lenders require a credit score of at least 620.
A jumbo loan is a type of mortgage with a higher amount than government lending limits. If you’re trying to apply for this type of mortgage, you may need a credit score of 700 or higher.
Other Factors Considered When You Apply for a Mortgage
Your credit score isn’t the only factor potential lenders consider when deciding whether to approve your mortgage application. They’ll also consider:
- Employment history
- Down payment
- Debt to income ratio
Your credit history goes beyond your credit score. Creditors will also look at your credit report to determine whether you’ve had delinquencies or prior negative items such as judgments or bankruptcies.
Checking Where Your Credit Stands
Before applying for a mortgage, make sure you know what’s on your credit report. You’re entitled to a copy of your credit reports each year from AnnualCreditReport.com, so it’s important to look over what’s being reported and make sure it’s accurate. Errors on credit reports are surprisingly common. If you have late payments being reported even though you weren’t late or accounts on your credit report that doesn’t belong to you, it can impact your ability to obtain a mortgage.
If you find errors on your credit report, Dovly can take care of disputing them with the credit bureaus for you. Dovly is an automated credit repair engine that helps you track, manage, and fix credit so you can have peace of mind knowing your credit report is showing the most accurate information possible. Get in touch with Dovly today.