Real Estate
June 18, 2018
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Credit score for mortgage

By: Scott Sheldon
February 9, 2018

The credit score to get a mortgage to buy a house is a lot less than you think. Here’s what the magic credit score is and what options you have available if your credit score is not the greatest and you’re looking to purchase or refinance a home… 

Despite what you read on the internet and hear from “financial experts,” the minimum credit score you need to get a mortgage these days is 580. To be clear that’s the minimum credit score that you need to get a mortgage and have that loan fund and to close successfully. You might hear of lower credit score mortgages however the consensus in the lending industry for credit scores is 580. Lenders will look specifically for a 580-middle credit score and it doesn’t matter which bureau, if your credit score is 580 or more and it’s your mid score, your credit score is eligible for financing.

The mortgage type that you can expect to qualify for would be an FHA mortgage or a VA mortgage. Some mortgage companies have a requirement called an “overlay” that requires a 10 percent Equity position. That is based on that individual mortgage company and that is not a specific guideline. If you’re told that you need 10 percent equity, pick a different mortgage company.

In this instance, it’s reasonable that if your credit score is in the 580 range you’re going to be looking at an FHA mortgage or a VA mortgage all the way until your credit score is 620. Once your credit score is 620 then you would be eligible for conventional financing based on the credit score alone. It’s also reasonable to expect to have an interest rate approximately .5 to .6 higher than interest rates you might see advertised due to the risk that the lender is taking associated with your credit score.

Mortgage Tip: credit score is nothing more than the likelihood of you having a default on a payment obligation in the next 30 days.

When your credit score is lower than 700 the lender begins to bear more risk in granting your loan request. When your credit score is less than 600 the risk is significant to the lender which is why if your credit score is sub 600 you might need to provide additional supporting documentation and your mortgage loan processing might be a bit heavier in terms of questioning and financial examination. Make no mistake however a good mortgage company should be able to walk you through the ins and outs of helping you successfully secure financing even if you have a credit challenge. You want a lender that understands complex loans and is an excellent problem solver. This is how you can help bridge the gap between getting that mortgage loan that you need despite adversity in the form of a bad credit score.

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Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes second homes and investment properties. Learn more at