When securing your mortgage loan, one of the key qualifiers you will be subject to is your credit score. What credit score should you aim to reach before applying for a loan? Really, it all depends on which type of loan you are looking to secure. There are several types of loans available, and each have unique terms associated with them. This breakdown consists of the most common loan types and their associated credit score requirements.
VA Loans and USDA Loans
VA loans and USDA loans are great options for several buyers on the market. One of the things that both types of loans have in common is the fact that they have no credit requirements. However, it gets a little bit deeper than that. Most lenders have credit score requirements of 620-640 for VA loans and USDA loans. Ultimately, it is possible to secure a mortgage if your credit score is lower, but it becomes much easier for buyers past the 620 thresholds.
FHA loans are a great option for those with lower credit scores. Buyers who can offer a 3.5% down payment or more are able to qualify with a 580 credit score. If you are able to bump your down payment up to 10%, you can even be approved for a mortgage with a credit score of 500.
Buyers seeking a traditional mortgage typically need higher credit scores. Most conventional mortgage lenders require a minimum credit score of 620-640. However, several benefits are attached to exceeding this threshold. Buyers with lower credit scores often have to compensate by increasing their initial down payment. Alternatively, a higher credit score gives buyers the leverage to tailor their mortgage to their liking.
Secure Your Mortgage Loan with Golden Lenders
Golden Lenders helps home buyers in Colorado, Florida and California understand the different types of mortgages that are available and provides loans to help people achieve the dream of homeownership. Since the specifics of which mortgage to choose is dependent on a variety of factors, we encourage you to call us for more information and find out which is right for you. Our number is (303) 482-2361, or you can send us a message.