Here’s one of the top questions we get asked. Borrowers always want to know what credit score is needed for a home loan. You’ll need a credit score of at least 620 to secure a mortgage in most cases. This is the bottom level for the majority of lenders. However, there are options (like FHA loans) for scores as low as 580.
Average Credit Score to Get Approved for a Home Loan
The Federal Reserve Bank of New York found that the median credit score for new mortgages in Q2 2021 was 786. But, average scores can vary in different parts of the country. So just because you don’t have a score in the 700s is no reason not to apply. We’re successful in helping borrowers with lower scores all the time.
The main thing you need to know is that once you’re close to 620, it’s time to apply.
Lowest Credit Score Needed for a Home Loan
If your credit score is low, an FHA loan may be the best option for you. You can put down 3.5% and still get a mortgage with a score as low as 580. If you put down 10%, you can get a loan with a score of only 500, as long as the lender is willing.
Which Credit Score Is Used by Lenders for a Mortgage Application?
All three credit bureaus are queried when an application is made. And each bureau has a different scoring method.
- Experian – FICO® Score 2
- Equifax – FICO® Score 5
- Transunion – FICO® Score 4
Most lenders will take the middle score if there is a difference between the three results. If there are two borrowers, they will select the lowest middle score of the two.
Is my Credit Karma Score Accurate for a Mortgage?
No – not really. Although your Credit Karma score comes from TransUnion and Equifax, they process the data differently. So your scores probably won’t be the same as what the lender pulls. Many borrowers are surprised by the difference. Sometimes they think their score is better or worse than what the mortgage lender receives when they pull their credit.
How Long Is a Credit Pull Good for Mortgage?
Fannie Mae guidelines state that credit reports are good for up to 120 days. If you are pre-approved but find a home four months later, your credit information may expire and need to be re-pulled.
The professionals at Homestead are here to get you from where you are – to where you need to be. We’re willing to work with you to make sure you can buy a home.
Homestead Financial Mortgage’s low-interest home loans are some of the best in the states we serve. We’re licensed in Arkansas, Colorado, Florida, Illinois, Indiana, Kansas, Kentucky, Missouri, Montana, Ohio, Oklahoma, Tennessee, Texas, and Wisconsin.
So now you know what credit score is needed for a home loan. If you need some help improving your score, let us know. We can take you from where you are – to where you need to be.
Contact us today to learn more about the home loan products we offer that are right for you.
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