You will receive many answers to your qualification question, but the answer is not as simply as the question. Many more factors will be considered depending on the type of financing and program you might consider for a mortgage loan.
You will however want to demonstrate a credit score of 620 to meet the credit qualification in most, but not all cases, and certainly to qualify for optimal rates. You will also have debt to income ratios to meet and income qualifications. You will want to avoid taking out new lines of credit or missing/being late on any payment for 12 months prior to applying.
If you would like me to connect you with a national lender for a personal Q&A session, just drop me a line.
Often I meet clients who think their credit is, as you say, "not so good." When I review their credit we find they actually qualify for a mortgage loan!
You mention not fully paying off credit cards. Let me strongly caution you NOT to pay off your cards! In today's lending environment we definitely want to see accounts open and active with balances. I recommend speaking with an experienced Mortgage Banker to get properly prequalified. The Mortgage Banker will review your Income, Assets, and Credit. If you are not qualified due to your credit score, your Mortgage Banker can recommend a course of action to improve your credit and become qualified in the future.
Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE: http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm
I am a Licensed Mortgage Loan Originator in New York State working for a Direct Lender. I have been helping First Time Buyers as a mortgage professional for 22+ years. If you wish to explore this further, I'd be happy to help!
PowerHouse Solutions, Inc.
185 Great Neck Rd, Suite 240
Great Neck NY 11021
Licensed Mortgage Banker – NYS Dept. of Financial Services