Your credit score is the deciding factor for making or breaking your house hunt, it also helps the lenders determine your interest rates and other extra costs. So you need to understand finances and know what credit score is required to own a house.
In this article, we have given a compiled list of the ideal credit scores for different types of loans. This information will help you know how your credit score influences the home-buying process and the steps to improve your credit score.
Minimum credit score to buy a house
The minimum credit score depends on the type of mortgage you want.
A minimum credit score is 500. If your credit score is low then the best option for you will be an FHA loan. A score between 500 and 579 means you must make a 10% down payment, if it’s above 580 then just pay 3.5%.
A low credit score will cause lenders to be more strict when approving your loan.
The minimum credit score is 620.
If you have good credit then most lenders will come forward to offer conventional loans. The loan amount isn’t checked or given by the government agency, instead, they follow the rules and regulations of the Federal Housing Finance Administration. If your score is above 720 then you’ll get the best rate.
A minimum credit score is 640. The VA loan is insured by the Department of Veterans Affairs. To get this loan you must be a veteran, an active duty member of the army.
An average credit score is 640. It is similar to VA loans, insured by the US Department of Agriculture.
An average credit score is 700. Jumbo mortgages allow people to get a loan for expensive properties. This year, there are certain limitations for conventional conforming loans.
Jumbo loans can be used for a variety of property types.
- Need higher credit scores
- Not government-backed
May require a down payment of between 5% and 25% depending on credit and income.
How to Improve Your Credit Score
To improve your credit score, first, you must check your credit report and know what’s making your score down. Then start improving.
Here are some tips to improve your credit score:
- Pay your bills on time
- Avoid new credit lines
- Lower your credit utilization
- Be patient
- Don’t close old accounts
- Be conscious of tracking your credit, pay your bills on time, and get the right loan for you!