This Article On Improve Credit Scores To Qualify Mortgage And Get Low Rates Was UPDATED And PUBLISHED On October 7th, 2019
It is possible for a home buyer to qualify for a home loan with bad credit. Borrowers who do not meet the minimum credit scores to qualify home loans can improve credit scores to qualify mortgage. How Fast Can I Improve Credit Scores To Qualify Mortgage?
- There are several variables in getting a home loan with bad credit
- Borrowers need to meet minimum credit score requirements
In this article, we will discuss and cover on How Fast Can I Improve Credit Scores To Qualify Mortgage.
Boosting Credit Scores
There are quick fixes to boost credit scores. Those who do not meet the minimum credit score requirements can improve credit scores to qualify mortgage. The following reasons are why consumer credit scores suffer:
- loss of employment
- medical reason
- other extenuating circumstances Lenders understand that people go through periods of bad credit due to the following:
The above reasons can lead to loss of income or substantial reduction of income.
- This causes borrowers to get behind in making their regular minimum monthly payments
- This affects their ability to make their monthly payments where their credit scores drop
- Mortgage lenders do have minimum credit score requirements to qualify for a mortgage
- For example, to qualify for an FHA loan with a 3.5% minimum down payment, borrowers need a 580 credit score
- Borrowers can qualify for FHA Loans with credit scores under 580 but 10% down payment is required
Qualifying For Mortgage With Credit Scores Under 620
However, having credit scores under 620, the debt to income ratios are restricted at 43% DTI.
- Borrowers with credit scores over 620 then the debt to income ratio gets greatly increased to 56.9% DTI
- To qualify for a conventional loan, the minimum credit score required is 620
- However, with conventional mortgage rates, the lower the credit score, the higher mortgage rates
- To get the best conventional mortgage rates, the conventional mortgage loan borrower needs a credit score of over 740
With FHA mortgage rates, anyone with a 640 credit score they will get the best mortgage rates.
Credit Score Requirements On Loan Programs
Every loan program has its minimum credit score requirements:
- The minimum credit score of 580 is required for 203K Rehab Loans
- A 620 credit score is required for bank statement mortgage loans for self employed borrowers
- Non-QM Loans require a 640 credit score
- Portfolio lenders who specialize in condotel and non-warrantable loans require a minimum of a 680 credit scores
- Most Jumbo Mortgage Lenders require credit scores of at least a 700 scores
To get the best Jumbo mortgage rates, Jumbo mortgage lenders will require credit scores north of 740.
Getting Qualified For Home Loan With Bad Credit
Homebuyers thinking of buying a home in the very near future, should consult with a mortgage lender as soon as possible and see if they qualify for a mortgage.
- Borrowers not qualified for a mortgage due to lower credit scores, there are some quick fixes loan officers can advise boosting credit scores
- For example, if credit scores are between 500 and 579, borrowers will not qualify for a 3.5% down payment FHA Loans
- The minimum credit score required for an FHA loan with 3,5% down payment is 580
Getting a one-point boost in credit scores should not be too difficult.
Boosting Credit Scores To Improve Credit Scores To Qualify Mortgage
Credit Scores go up and down. There are quick fixes to improve credit scores to qualify mortgage.
- Borrowers can probably get a several point boost in credit scores by just paying down credit card balances
- Or if credit scores are at 579 because the borrower has no active credit accounts, getting one secured credit card can boost credit scores up by 20 or more points
- There are ways of boosting credit scores by adding oneself to someone else as an authorized user
However, to have this authorized user credit card to work, the authorized user needs same last name as main cardholder and/or have the same billing address.
How Fast Can My Credit Scores Be Boosted Up To Qualify For mortgage?
Improving credit scores takes time and does not happen overnight:
- For example, if borrowers were to get a secured credit card to boost credit scores, it will take at least a week or more to actually get secured credit card
- Once consumers use it, depending on when they get secured credit card, it will not post to the three credit reporting agencies until the end of the month
- New credit scores will be reflected in the beginning of the month
- For example, say borrower applies for a secured credit card May 1
- They will most likely get secured credit card on May 10th
- Borrowers use credit card and credit statement will post by May 31st
- The three credit bureaus will have new credit posted by June 5th
- So in a little over 30 days, new credit card will be posted to all three credit reporting agencies
- Same concept goes with high balance credit cards
- Borrowers intending on paying down credit cards to boost credit scores need to pay for them early enough
- This way it posts to all three credit reporting agencies by the end of the month
- New credit balance information will be reflected on credit report by the beginning of the following month
Home Buyers who need to qualify for a mortgage with a direct lender with zero mortgage overlays on government and conventional loans can contact us at Gustan Cho Associates Mortgage Group at 262-716-8151 or text us for faster response. Or email us at email@example.com. We are a five-star lender with 5 Star Reviews. We are available 7 days a week, evenings, weekends, and holidays.