Your credit scores is the deciding factor on whether or not you qualify for a certain mortgage loan program and the amount you get charged for mortgage rates. With conventional loans, you need a credit score of 740 FICO or higher to get the best possible mortgage rates. Your mortgage rates will be higher with every 20 point drop on your credit scores. The breakdown on credit scores for conventional loans are 760 FICO, 740 FICO, 720 FICO, 700 FICO, 680 FICO, 660 FICO, 640 FICO, and 620 FICO. Those in the 620 to 640 FICO credit scores bracket will be paying the highest mortgage rates and possibly points. The bare minimum credit score to qualify for a conventional loan is 620 FICO. 620 FICO credit score is considered a real bad credit score for a conventional loan but home buyers can qualify for a conventional loan with a 620 FICO score.
Credit Scores And Mortgage Programs
There are certain minimum credit scores requirements to qualify for the various residential mortgage loan programs. For FHA loans, the minimum credit scores required to qualify for a 3.5% down payment FHA loan is 580 FICO. However, if your credit scores are between 580 FICO and 620 FICO, then you maximum debt to income is capped at 43% debt to income ratios. If your credit scores are at 620 FICO or higher, your debt to income ratio boosts up to 56.9%. Sometimes it is worthwhile to try to improve your credit scores and then apply for a mortgage loan in order to get favorable debt to income ratio caps increased. You can qualify for a FHA loan with credti scores between 530 FICO and 580 FICO as long as you can put a 10% down payment on your home purchase. If you can only put a 3.5% down payment on your home purchase via FHA loan, you need to improve your credit scores to at least a 580 FICO.
FHA 203K LOANS
FHA 203K loans are aquisition and construction loans all in one. FHA 203K loans require a minimum of 640 FICO credit scores to qualify.
Minimum credit scores for VA Loans is 580 FICO. However, compensating factors may be required. To get the best VA loan programs available where there are no ovelays or rental verification required, one should have a 620 FICO minimum credit score.
USDA loans are an excellent mortgage loan program which offers 100% financing and requires no down payment on behalf of the home buyer. There is a 2% funding fee of the loan amount which can be rolled into the mortgage loan amount. To qualify for USDA Loans, the mortgage loan applicant needs a 580 FICO credit score and the property needs to be in a designated area deemed rural by the USDA and there is certain household maximum income requirements. The debt to income ratio is more strict that those of other residential mortgage loan programs. The front end debt to income ratios is normally capped at 29% debt to income ratio and the back end debt to income ratio is capped at 41% DTI.
Homepath Mortgage Loans
Homepath mortgage loans are conventional loans where no appraisal is required. Home buyers can qualify for Homepath mortgage loans with a minimum credit score of 660 FICO.
Condotel Mortgage Loans
Condotel mortgage loans are portfolio mortgage loans and the minimum credit score required to qualify for condotel mortgage loans is 680 FICO.
To qualify for Jumbo Loans, Jumbo mortgage lenders would like to see high credit scores from Jumbo mortgage loan borrowers. Over 700 FICO credit scores are normally required, however, lower credit scores mortgage loan borrowers can still qualify. To qualify for 90% loan to value jumbo mortgage loans, you need a minimum of a 740 FICO credit scores.
Most commercial mortgage lenders want to see their mortgage loan applicants to have a minimum 640 FICO credit scores.