Being a homeowner is a lifetime dream for most people. But, achieving this dream can be very hard. Applying for a mortgage is the go-to method for buying a home.
Additionally, lenders will only consider your application seriously if you have an appropriate credit score. Buying a home is not a walk in the park.
However, with some insight into different types of mortgages, you can make your dreams of being a homeowner come true. Keep reading to learn about the role of your credit score in obtaining a mortgage to buy a home.
Credit Scores for Different Types of Mortgages
There are several different types of mortgages. This is why it is imperative to know what credit score is necessary for the type of mortgage you want. In order to be eligible for some mortgages, your credit score needs to correspond to the minimum requirement.
Federal Housing Administration Loans and Mortgages
FHA (Federal Housing Administration) loans are mortgages financed by the government. The minimum credit score required to obtain one is 580. There is an additional requirement of a 3.5% deposit to guarantee eligibility. Conventional mortgages are mortgages given by private banks and generally require a credit score of 620+.
However, this is just an overview of minimum requirements. This means that meeting these minimum credit score requirements will not automatically land you a mortgage. The higher your credit score is, the higher your chances are of obtaining a mortgage.
Why is Your Credit Score So Important?
Understanding your overall credit picture is very important. If you haven’t already, you should start looking into your credit score as soon as possible. Acquaint yourself with the minimum requirements that you have to meet in order to successfully apply for a loan. Once you know your credit score, you will be able to determine exactly what kind of financing you qualify for.