Improving Credit Scores To Qualify For Mortgage Loans
This BLOG On Tips Improving Credit Scores To Qualify For Mortgage Was UPDATED On February 20th, 2019
Mortgage Borrowers credit scores are the deciding factor on whether or not they qualify for a certain mortgage loan program and the determining factor with mortgage rates.
Mortgage Rates function in two ways.
- Qualifying for a mortgage loan
- Pricing mortgage interest rates
In this article, we will cover and discuss tips and advice in re-establishing and maximizing credit to qualifying for a mortgage.
Credit Scores Versus Mortgage Rates
The higher the borrower’s credit scores, the lower the mortgage rates. Especially with conventional loans.
- With conventional loans, borrowers need a credit score of 740 or higher to get the best possible mortgage rates in the market
- Mortgage rates will be higher with every 20 point drop on credit scores
- This is especially on conforming loans
- The breakdown of credit scores for conventional loans are
- and 620
- Those in the 620 to 640 credit scores bracket will be paying the highest mortgage rates and possibly points on conforming loans
- The bare minimum credit score to qualify for a conventional loan is 620
- 620 credit score is considered a really bad credit score for conventional loans
- But home buyers can qualify for a conventional loan with a 620 score
Credit Score Requirements On 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
- However, if credit scores are between 580 and 620 the maximum debt to income is capped at 43% debt to income ratios
- If credit scores are at 620 or higher, debt to income ratio boosts up to 46.9% front end and 56.9% back end DTI to get an approve/eligible per Automated Underwriting System Approval
- Sometimes it is worthwhile to try to improve credit scores prior to applying for a mortgage loan in order to get favorable debt to income ratio caps increased
- Borrowers can qualify for an FHA loan with credit scores between 500 and 579 as long as they can put a 10% down payment on a home purchase
- If borrowers can only put a 3.5% down payment on home purchase via FHA loan, they need to improve credit scores to at least a 580
What Are Credit Scores Required On FHA 203k Loans
FHA 203K loans are acquisition and construction loans all in one.
- FHA 203K loans require a minimum of 580 credit scores to qualify
- Many FHA 203k Rehab Mortgage Lenders have overlays on credit scores with FHA 203k Loans
- Most of them require a 640 credit score
- However, The Gustan Cho Team at Loan Cabin Inc. is a direct lender on government and conventional loans with no overlays on FHA 203k Loans
- The Gustan Cho Team only requires a 580 credit score on FHA 203k Home Rehab Loans
VA Home Loans
The Veterans Administration (VA) does not have a minimum credit score requirements on VA Home Loans.
- However, most VA Lenders Has Overlays on credit scores on VA Home Loans
- Most VA Lenders will require a 620 to 640 credit score by borrowers although VA does not have a minimum credit score requirement
- Gustan Cho Associates Mortgage Group has zero overlays on VA Loans
- However, compensating factors may be required
- To get the best VA loan programs available where there are no overlays or rental verification required, one should have higher credit scores
Gustan Cho Associates can give borrowers tips in Improving Credit Scores To Qualify For Mortgage Loans.
USDA Mortgage Home Loans
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 credit score and the property needs to be in a designated area deemed rural by the USDA and there are certain household maximum income requirements
- The debt to income ratio is more strict than 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.
Condotel Mortgage Loans
Condotel mortgage loans are portfolio mortgage loans and the minimum credit score required to qualify for condotel mortgage loans is 680. If borrowers have lower scores, we can help Improving Credit Scores To Qualify For Mortgage on condotels.
To qualify for Jumbo Loans, Jumbo mortgage lenders would like to see high credit scores from Jumbo mortgage loan borrowers.
- Over 700 credit scores are normally required
- However, lower credit scores borrowers can still qualify
- To qualify for 95% loan to value jumbo loans, you need a minimum of a 720 credit scores
Gustan Cho Associates at Loan Cabin Inc. has NON-QM Jumbo Mortgages with 90% LTV with 680 credit scores. There are quick fixes in Improving Credit Scores To Qualify For Mortgage Loans.
Most commercial mortgage lenders want to see their mortgage loan applicants to have a minimum of 640 credit scores.
Non-QM And Bank Statement Mortgage Loans For Self Employed Borrowers
NON-QM Loans require a minimum of 640 credit scores for 20% down payment home purchase loans.
- 660 credit scores require 15% down payment
- To qualify for 10% down payment non-QM loans, 680 credit scores are required
- Bank Statement Mortgage Loans For Self Employed Borrowers require 620 credit scores with 20% down payment
- To qualify for 5% down payment bank statement mortgage loans for self-employed borrowers, 720 credit scores are required
Qualifying For Mortgage With Direct Lender With No Overlays
Home Buyers who need to qualify for a mortgage with a national direct lender with no overlays on government and conventional loans can contact us at The Gustan Cho Team at Loan Cabin at 262-716-8151 or text us for faster response. Or email us at firstname.lastname@example.org. Gustan Cho Associates Mortgage Group has no overlays on FHA, VA, USDA, and Conventional Loans. We are available 7 days a week, evenings, weekends, and holidays.
This BLOG On Improving Credit Scores To Qualify For Mortgage Loans Was UPDATED On February 20th, 2019