Credit Scores

Income, credit, credit history, and credit scores are all determinents to qualify for mortgage loans.  The single most important factor in whether or not you qualify for a certain type of loan program is  your credit scores.  For example, the minimum credit score that is required to qualify for a conventional loan is 620 FICO.  Anyone under a 620 FICO credit score cannot qualify for a conventional loan.  To qualify for a 3.5% down payment home purchase FHA loan, the minimum credit score required is 580 FICO credit score.  You can still qualify for a FHA loan with a credit score as low as 530 FICO but anyone with credit scores between 530 FICO and 580 FICO credit scores, the home buyer would need a 10% down payment.  For those with credits scores of less than 620 FICO, FHA debt to income ratio caps goes down to a 43% debt to income ratio whereas if the credit scores were 620 FICO or higher, the debt to income ratios can go as high as 56.9% debt to income ratio.

Conventional Loans And Credit Scores

Conventional loans are credit score sensitive unlike FHA loans.  To get the top rates on conventional loans, a conventional mortgage loan borrower will need credit scores of over 740 FICO.  Conventional mortgage rates will get rate adjustments every 20 points.  For example, your mortgage rate adjustments will factor in at the following levels.  You will most likely get par rates with no adjustments at a 740 FICO credit score for a conventional loan.  Then for every 20 points increments, there most likely be a negative adjustment towards your rates:  720 FICO, 700 FICO, 680 FICO, 660 FICO, 640 FICO, and 620 FICO.  With FHA loans, par rates are at 640 FICO credit scores and higher so whether your credit scores are 740 FICO or 640 FICO, your FHA mortgage rates will be the same.  There are negative adjustments for FHA mortgage rates for credit scores under 640 FICO.

Credit Scores And Other Mortgage Loan Programs

There are other mortgage loan programs that require minimum credit scores.  For example, to qualify for a lender paid mortgage insurance ( LPMI) 90% Loan to Value Jumbo Loan with no mortgage insurance, the mortgage loan borrower needs at least a 740 FICO credit score.  To qualify for a condotel unit portfolio mortgage loan, the condotel unit buyer needs a minimum of a 680 FICO credit score.  To qualify for a Fannie Mae HomePath mortgage loan, the minimum credit scores required is a 660 FICO.  To qualify for a USDA loan, the minimum credit scores required is a 580 FICO.  To qualify for a FHA 203K loan, the minimum credit scores required is a 640 FICO.   You can qualify for a VA mortgage loan with a credit score of 580 FICO.   Credit scores are extremely important if you want to qualify for a certain mortgage loan program.

Gustan Cho

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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