Home Buying in Louisville>Question Details

Roswithawynn, Renter in Louisville, KY

what has to be your credit score to buy house?

Asked by Roswithawynn, Louisville, KY Fri Oct 4, 2013

Help the community by answering this question:


Big stuff for sure. 640 is the bottom score (again with few exceptions) that lenders will permit. Below a 620, then you’re in a world of hurt. Even at 640, people consider you a higher risk that other folks and are going to penalize you or your borrower with a more expensive loan. 700 is when you really start to get in the “as a lender we love you” credit score. 720 is even better. Watch your credit!!!!! Check out my post:

Kentucky Housing VA FHA KHC USDA and FNMA all require 640 credit score!
1 vote Thank Flag Link Sun Dec 15, 2013
Your credit score is just one of the factors your mortgage lender will use to determine whether you qualify for financing. The problem is, every lender uses different methods to determine your credit worthiness. So, in some cases, a minimum score is difficult to determine for conventional loans. In other cases, especially when loans are underwritten or insured by government organizations, there are minimum credit scores to qualify.

Acceptable Scores
The score your lender will accept for a conventional loan can be determined by many factors, including your payment history, your salary history, your current wage, your available credit, the scores other lenders are accepting and the current economic climate. Cornett Communications advises that even in tight economic times, a score of at least 640 will get you in the door for financing.
Fannie Mae
Fannie Mae is one of two government-backed mortgage lending houses; Freddie Mac is he other. Independent lenders take many of their cues from what these two organizations do. According to the "Washington Post," Fannie Mae raised its minimum credit score for conventional loans in 2009 from 580 to 620. Even if you have a 20-percent down payment, you can be rejected if your score is below 620. Fannie Mae will also reject a loan if more than 45 percent of your income goes toward paying debt.
Government-Backed Loans
Home loans backed or financed by the Federal Housing Administration and the Veterans Administration have different views of credit scores. FHA recently changed its minimum credit score to 580, which qualifies you for lending programs that require only a 3.5 percent down payment. VA loans are 100-percent financed and set aside for active and retired military, along with their families. There is no minimum credit score to qualify, though a better credit score will get you a better interest rate.

What Your Score Gets You
Your credit score is one of the factors that will determine your mortgage loan interest rate. The better your score, the better your interest rate is likely to be. FICO, also known as the Fair Isaac Corporation, posted the differences in interest rate you may pay, depending on your score. If your score is between 620 and 639—considered a risky score by some creditors—you could pay an interest rate of 5.718 percent on a $300,000, 30-year conventional mortgage. As of mid-August, 2010, If your score is at the high end, 760 to 850, your interest rate could be 4.129 percent on the same loan. A score of 650 may net you a rate of 5.172 percent.
Addressing Your Credit Score
If your credit score won’t allow you to get a home loan now, you can so some things you can to improve your score, which are updated on a monthly basis. Make sure all of your bills are paid on time; late payments drive down your score. Pay down your credit balances; maxed-out credit accounts can also hurt your score. Also, check your credit report on a regular basis for errors. This is one of the easiest ways to improve your score. If you find errors on your report and you can prove they are errors, the credit bureau is obligated to remove them.
1 vote Thank Flag Link Wed Oct 16, 2013
Most lenders want a 640 score, but I have a few that will accept a 620 score. These programs also allow for down payment assistance, or as low as 3% down. Some offer no mortgage insurance, which is huge compared to the FHA loan where you have to have mortgage insurance for the life of the loan. Being a former loan officer prior to selling, I am experienced and knowledgeable in improving credit score to purchase a home. I work with a number of associates that also have the experience, and we work well together. Give me a call at 224-7917 to discuss your situation privately

Iris Triplett-Baker
Real Estate Unlimited
1 vote Thank Flag Link Fri Oct 4, 2013
FHA loans and VA loans have more flexible guidelines especially in the area of credit. I’ll give you an example — the minimum credit scores that we’re talking about for an FHA or a VA loan, typically in today’s market is 620. (Compare that to) a traditional conventional loan where the minimum score that you really are looking at is 680; otherwise, you get really hit with extra costs and penalties. So FHA and VA loans have more flexibility depending on what state you’re in. Sometimes there are state programs that you should inquire about that also have more flexibility. A mortgage is still absolutely a possibility.
1 vote Thank Flag Link Fri Oct 4, 2013
This can really depend on the lender. Some lenders may want higher credit scores and others may be able to accept lower scores. For example, I have been able to give out loans with scores as low as 580. So if you are in the range or above you have a shot at getting a loan. I would recommend that you speak with a lender. There are lenders like myself that would glad to speak with you to help you get the loan that you need with what you have. So if you have any further questions or if you need a loan, feel free to contact me! Good Luck! Brian Nguyen Sr. Mortgage Banker NMLS # 659743 Phone: 949.667.2887 brian.nguyen@nafinc.com
0 votes Thank Flag Link Fri Feb 14, 2014
580 for FHA, 620 for conventional.. I would recommend finding a broker or service to help you locate a reputable lender to work with like, The Lenders Network. Good luck!
0 votes Thank Flag Link Fri Nov 29, 2013
For conventional mortgage loans and even some government sponsored programs, 640 is minimum credit score. For FHA loans, some lenders will now accept scores as low as 580. If you have some credit score issues that need to be cleaned up, I often refer my clients to a local credit repair company. In most cases, you can see drastic improvement in as little as 30 - 60 days. Please feel free to call me anytime to discuss your situation. I'm in the Louisville area. My direct phone number is 502-314-5626.
0 votes Thank Flag Link Sat Oct 5, 2013
640 is usually a good base number, although there are many different lending institutions that can work with lower numbers.
0 votes Thank Flag Link Fri Oct 4, 2013
This can vary based on personal situations. I have lenders who can go as low as 580 but there are what they call 'overlays' involved. Meaning you may have to have two months of payments as reserves at closing. You may pay a slightly higher rate and you will pay more in private mortgage insurance if you do not put 20% down.
Most lenders are comfortable at 640.
We have several lenders we work with. Give me a call and I can give you names and numbers. 502-639-9617
0 votes Thank Flag Link Fri Oct 4, 2013
Frankie is right on this. 640 is about the minimum score most lenders want to work with but there may be special programs that allows something different.
0 votes Thank Flag Link Fri Oct 4, 2013
You can qualify for a FHA mortgage loan with scores as low as 560. I've been writing these mortgage loans in Louisville for 18 years and would be glad to help you. I can be reached at 753-1340.
0 votes Thank Flag Link Fri Oct 4, 2013
In most cases you are looking at 640 as the minimum for most loan types. However, there exceptions and possibilities for scores under 640. I'd be happy to look at your situation and see where you are.
0 votes Thank Flag Link Fri Oct 4, 2013
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