In recent years, a new way to determine whether or not someone can afford a house is by credit score. The general idea is that the higher your credit score, the more debt you will be able to handle, and your ability to pay rent will not be affected. Previous generations did not need this because they did not have access to credit card loans like today’s generations do.
This makes it difficult for people who need different loan products other than Mortgage Rates Chicago, such as first-time homebuyers looking into renting instead of buying property. For these individuals to purchase their own homes, they must contact an approved source from a lender before applying for a mortgage.
What Credit Score Do You Need to ?
There are many ways to get a mortgage, including FHA, conventional, jumbo, and variable rates. Suppose you will buy a home with the full intention of living in a single-family house as your primary residence. In that case, the best way is through a conventional loan. If you are thinking about renting your primary home or moving into an apartment instead of purchasing a house, it is wise to look into using an FHA loan.
Minimum Credit Score Needed For First Time Home Buyer by loan?
Conventional Loan | Credit Score: 620
A regular bank loan for buying a house has a minimum Credit Score Needed For First Time Home Buyer requirement of 620. To qualify for this type of loan, you will need to have a FICO score of 580 or greater. A score greater than 600 must be approved for an FHA, VA, or USDA loan.
Jumbo Loan | Credit Score: 620
Jumbo loans are a particular type of conventional loan with higher interest rates and penalties. Still, they also have additional requirements that are not as strict as the traditional loans above. You must meet all the same credit guidelines while using this product, so the only difference is that you need a FICO score between 650 and 699 under this kind of loan product.
USDA Loan | Credit Score: 620
The USDA loan is a particular type of home loan that allows you to finance your home with flexible terms and an affordable interest rate. There are limitations on where you can buy your house (it has to be in a rural area or an area that does not have high market demand), so check their requirements carefully for more information.
How Does Your Credit Score Affect Your First-Time Home Buyer Prospects?
Finding a home has never been more complicated with the housing market in a bad state and prices dropping. Adding in the fact that you need good credit makes it even more challenging to find the right house. The good news is that there are still homes around—you have to make sure that you have a high score to be competitive with other buyers. Many first-time homebuyers overlook their credit scores before looking for new homes and lose out on a property because of this.
If you are a first-time homebuyer, you know exactly how hard it can be to find your dream home. With the housing market the way it is, this has never been more difficult. If you want to make sure that you do not lose out on the perfect house because of a low credit score, make sure that your FICO score is as high as possible before looking at homes.