So you want to know the needed minimum credit score for a home mortgage loan? Not to long ago it was a piece of cake to get a home mortgage loan. Regardless of your credit score, it only took your desire to buy a home and the willingness to sign a home mortgage agreement from the large number of lending institutions chomping at the bit to get your business.
Because of these irresponsible practices on the part of the home mortgage lenders and the complicity of unqualified buyers willing to snap up these homes, we are experiencing catastrophic effects in today’s housing market and the economy overall. This has led to those people still in the market to purchase a home asking; just what is the minimum credit score for a home mortgage loan these days?
While many factors influence this number, the answer to this question is that as a general rule, if your credit score falls below a minimum of 640, then you will find it a bit difficult getting approved for a home loan. With that said, it would still be possible to get a loan, and of course there are many things you can do to improve your credit score. Honestly, I recommend anyone try to clean up his or her credit before applying for a home mortgage loan in order to get the best interest rate possible.
The first thing any prospective loan seeker should do is pay off any outstanding debts than you can afford to pay. It is really surprising how many people have credit card debt that they are able to pay off but do not because they would prefer to “stay liquid.” This is a major mistake and counter intuitive. Not only are you costing yourself more money by paying the exorbitant interest fees, but also it’s bad for your credit. You don’t have to pay off the credit card in full, just pay it down to less than 20 to 30 percent of it’s maximum balance and demonstrate that you can handle a moderate level of debt by making consistent payments towards it diminution.
Your job history and cash on hand will also influence the needed minimum credit score for a home mortgage loan. If you have a good paying job with long tenure, the mortgage lender will be favorably influenced by this work history. Additionally, if you have a stack of cash that you can apply to a down payment then a lower credit score won’t hurt you as much as if you were looking for a low down payment loan.
So the long and short answer for anyone asking just what is the minimum credit score for a home mortgage these days, the answer depends on many factors. You definitely want to have credit above 640, but remember the higher it is, the better the terms you will get on your loan.