Home Buying in Dallas>Question Details

Camisha Carey, Renter in Texas

What credit score should a couple try to be at before purchasing a home?

Asked by Camisha Carey, Texas Sun Oct 10, 2010

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The 640 vs. 700 is the case on FHA, however you have to keep in mind Scott that this also depends on how the loan officer prices up the loan, as well as the size of the loan. On smaller loans, there are certain adjustments whether the loan is FHA or conventional. Also, there are some loan officers that feel that just because the person is going FHA, they need to make 4 or 5 points on the loan, regardless of loan size. It is no longer much more difficult, basically getting a few extra pieces of paper signed. Not labor intensive enough to warrant the extra fee.
2 votes Thank Flag Link Sun Oct 10, 2010
Leila, what you have to keep in mind is that HUD will put in certain guidelines, like the ones you mentioned, however that does not mean that banks will lend under those guidelines. I do have some who will lend to 620 on FHA, and I know that there are some mortgage bankers who sell directly to the GNMA pool will go lower, but it is harder to find those, and I don't think anyone goes below 580, no matter what the down payment is.
1 vote Thank Flag Link Fri Oct 15, 2010
Scott,

Sure thing...I was referring to RJ Avery being correct in the 640 FICO score minimum. Regarding Rates, my FHA 30 year Fixed at 4% pays me 2 points with the FICO score adjustment and my Conforming 30 year at 4% pays me a little less than 1 point. (My rate sheet doesn't go under 4% to get me to par pricing and it is capped at 4.5% max rate for FHA, but my rate sheet goes as high at 4.875% for Conforming.) Technically the client would get the same rate in this scenario. Now as far as what lenders are offering is a different scenario as Robin Silverberg pointed out. She hit it right on the head with the comment regarding FHA loans are not as labor intensive as once before and they are only a few more disclosures. Some lenders automatically would jump to 4.5% and make 3.7 pts on the back and 1 point on the front because the thought process is "it is a harder loan to write and the client has a lower credit score so let's make some money on this baby!" Unfortunately, that is why there is a perception that FHA or Government loans have a higher rate than Conforming. Shoot me an email at av@thevaghelagroup.com. Also I am in Texas and I see you are in Florida so my rates may seem higher than what your clients are getting. Due to Florida’s current market the rates offered there are lower than what is offered in our market.
1 vote Thank Flag Link Wed Oct 13, 2010
Hi AV. Question: are you saying that a 640 scored buyer and a 700 scored buyer (everything else being the same) will get the same exact rate? Not everybody is buying via FHA, right? I was under the impression that the higher the better, too....that's why I suggested she wait a little and go for the higher number.

I'm all ears, you're the expert on financing, not me.

Thank you.

Scott Miller, Realty Associates, Boca Raton, FL
1 vote Thank Flag Link Sun Oct 10, 2010
Here is the credit score matrix from Fannie Mae:
https://www.efanniemae.com/sf/refmaterials/eligibility/pdf/e…

This will tell you exactly how much a higher credit score will save you on your interest rate.
1 vote Thank Flag Link Sun Oct 10, 2010
To obtain FHA financing now which would require a 3.5% down payment, you need to have a 640 Mid-score between the 3 major credit companies. Home prices are low now and the the rates are at historic lows. If your credit is sufficent I would definently look at buying a home now.
0 votes Thank Flag Link Fri Oct 15, 2010
Hi Camish. I heard that this Month HUD was going to put in effective a new minimum credit scores and loan-to-value ratios. Borrowers with a credit score as low as 580 would be eligible for financing with the minimum 3.5% down payment and borrowers with a credit score of 500 to 579 would be limited to 90% LTV, requiring a 10% down payment.

With this in mind talk with a loan officer to see if you qualify for the new guidelines.

Please feel free to contact me if you would like additional information or need assistance in finding a loan office or a home!
0 votes Thank Flag Link Thu Oct 14, 2010
First, and foremost, pay all your bills on time. Even if you can't or don't pay off debts completely, make the monthly payment on time. Late payments will devastate your scores.

Liens of judgments for non-payment of housing expenses will kill you chances. There are worse things you can do, like not paying and getting a charge-off or having it sent to collection. Bankruptcy and foreclosure are even worse, but assuming that you don't have any of these things, then your target should be mid-600s.

The higher, the better, because your score does vary each month. In order to qualify for FHA under current rules, you'll need a 640 mid-score. That's not the highest or the lowest of the scores from the 3 credit bureaus. Conventional (non-VA, non-FHA) loans are looking for 680 or better. But, lenders will charge a premium for scores just above the minimum needed to qualify.
0 votes Thank Flag Link Tue Oct 12, 2010
That depends on the loan amount and down payment.
640 is the 1st goal. If you want a conventional loan and have less than 20% down payment then you will need 680
0 votes Thank Flag Link Mon Oct 11, 2010
RJ Avery is correct. 640 as of this past Monday. It was 620 before. Real Estate Agents, if your current lender is keeping you in the loop on current guidelines and changes in the market place shoot me an email introducing yourself at av.vaghela@supremelending.com and I will forward you the email I sent my realtors earlier in the month. It shows the latest FHA updates regarding credit score requirements and the new upfront and monthly PMI structure in 2 simple PDF's.
0 votes Thank Flag Link Sun Oct 10, 2010
Camisha, it depends on what type of loan you are looking for, and how much money you have. Now, to clarify what others have said, each of you have scores from 3 different credit bureaus, Equifax, Transunion, and Experian. They are not looking for the average score, or the lowest score, or whatever anyone else has said below. They take the score that is numerically in the middle of the 2 others for each one of you, and use the lower of those 2. So, let's say you have a 712, a 650, and a 627, your middle score is 650. If your spouse or partner has a 712, a 710, and a 627, their middle score would be a 710. Your score would be the one that determines what program you will be best in, or the add-on to your rate for a conventional loan. If you are planning on a low-down payment FHA loan, if you are below 660, you will be more limited to which bank you can use, however there is a very small adjustment for having any variation in credit score at all on FHA.
0 votes Thank Flag Link Sun Oct 10, 2010
It's not just the credit score, you need to have solid job history, debt to income has to be taken into consideration, etc. Your credit score does factor in your debt, but it doesn't compare your debt to how much you make.

Credit scores should be close to, if not above, 700 to qualify for the best that's out there.
0 votes Thank Flag Link Sun Oct 10, 2010
Credit score is a measure of overall credit health, but I think that prospective homeowners need to have a habit of paying all their bills on time, no excuses or exceptions, for at least one year.

A mortgage is a thirty-year commitment, and unlike a landlord who might be forgiving if you're late, you will be tagged late fees with a mortgage.

I also want to add that, if you are not married, it is essential that you meet with a lawyer and draw up a partnership agreement; lawyers make their real money dealing with people who never bothered to take this important first step. One question you might need to deal with is: what happens to the house if one of you dies? What if their family stakes a claim to the property, and tries to force a sale?

All the best,
0 votes Thank Flag Link Sun Oct 10, 2010
Hi Camisha. I say 700. Even if you have a 620-699 score, you're not going to qualify for the best rates. If you have a couple of months and can spend a few dollars on bumping up your scores, go to:

http://www.lexingtonlaw.com/ and see if you can't get a 50-100 point increase before you apply for a mortgage. It's worth the effort and $.

GOOD LUCK!!

Scott Miller, Realty Associates, Boca Raton, FL
0 votes Thank Flag Link Sun Oct 10, 2010
It depends if your loan will be based on both apply for a loan. Can be confusing best contact a mortgage broker discuss the particulars

Direct Link might answer all your questions:
http://www.lynn911.com/Web/AR287090/CustomContent/index/5032451

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Sun Oct 10, 2010
For FHA you need a combined FICO score of at least 620. There are other loan programs available also but will still most likely require a 620 minimum score. I would be happy to put you in touch with a great loan officer that can give you all of the information that you need to be informed and prepared for the loan process. I can also prepare you for the home purchasing process ahead of time. Please visit my website AboutDFWHomes.com or email me at nmonts@contactdallas.com for a ton of great home buying info and I will put you in touch with a great loan officer as well. Have a great day!
0 votes Thank Flag Link Sun Oct 10, 2010
Camisha,

I agree with AJ. 640 is required for most programs right now. 700 is even better and will give you a more competitive rate.
0 votes Thank Flag Link Sun Oct 10, 2010
The higher the better. 620 was the minimum but that has been raised to 640. Anything above the minimum should get you a competitive rate. If you have any questions about the process as a whole I would be happy to help.

Thanks
RJ
0 votes Thank Flag Link Sun Oct 10, 2010
650 is the minimum from what I have heard, and that is for the lowest on the couple. So if one is higher, they use the lower score. If one person is high and the other low you might be able to get the house under the higher person's qualifications. Im sure a local mortgage broker will respond to to give you specific direction. good luck!
0 votes Thank Flag Link Sun Oct 10, 2010
The higher the score the better the rate--most lenders will work with 620, however, there are some that may work with less--if you plan on buying and haven't done so yet, do visit with any qualified loan officer(s) first, see if you qualify, the type of loan, how much, have your credit score checked as their scoring is often different, etc.; should your score need improvement, you loan officer can suggest great ways of doing so in the fastest time--then go from there.
0 votes Thank Flag Link Sun Oct 10, 2010
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