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Your credit situation is among the most important factors affecting your chances of getting a favorable mortgage loan. The 2020 home credit requirements depend on what type of house loan you choose to opt for. Let’s examine the minimum credit score requirements of the most common mortgage loan options:
FHA loans feature the lowest 2020 home credit requirements with a minimum required score of 500. If your credit score lies between 499 and 580, you will have to pay a down payment of 10%. Yet, it’s very challenging to get an FHA loan with a credit score that is below 580 without some compensating factors such as reserves. With a credit score of over 580, a minimum down payment of 3.5% is required.
If you need more information on this type of loan, you can request information from an Alliance member.
Since these loans are issued by private lenders or banks who tend to take more risk, the credit requirements to qualify for this loan are also higher. While the minimum credit score requirement is 620, many lenders demand higher scores.
The VA itself does not have any minimum credit score requirement, but the lenders normally have certain score requirements in mind when giving VA loans. The Lenders Alliance will require a score of at least 580 for a 100% VA home loan.
People living in rural areas that come under the USDA can benefit from USDA loans. Qualifying for this loan does not require down payment, but you need a credit score of no less than 620. When compared with FHA loans, USDA loans include mortgage insurance premiums that are $100 lesser per month on average.
If you’re looking to buy a home and need a loan, it’s always a good idea to be aware of the credit requirements for each type of loan.
Please click here to get more information on home credit requirements from an Alliance member.