What Credit Score Is Needed to Buy a House?

If you’re hoping to buy a home in the near future, there are a number of financial factors you’ll need to consider.

One of the factors that all lenders will consider when determining whether or not to approve you for a mortgage is credit score.

In this article, we’ll lay out the minimum and ideal credit scores that are needed for getting approved for a home loan.

Determining Your Score

As you may guess, credit reporting is a complicated business. There are three main reporting companies that lenders use to determine your credit: Experian, TransUnion, and Equifax. These companies largely collect the same data about your finances, but can have minor variations. Lenders will take these scores and use the median or middle score to determine your credit rating.

Thanks to the Fair Credit Reporting Act, Americans have the ability to confirm the accuracy of their reports.

If you want to find your credit score, there are a number of online reporting agencies that will show you your report for free on an annual or monthly basis.

Minimum credit scores

Depending on the type of loan you’re applying for and which lender you are pursuing, minimum credit scores vary.

For those seeking first-time homeowner (FHA) loans, you’ll need a credit score of at least 580 to qualify for a 3.5% down payment. A score lower than this amount and you will need to put at least 10% down.

Since FHA loans are insured by the government, you are more likely to be approved if you have a low or “poor” or “bad” credit score (usually anywhere from 300 to 650).

Another type of loan that could help people with low credit is offered by the Department of Veteran’s Affairs. These loans, known as VA loans, are guaranteed, in part, by the government. However, the loans are still approved and distributed by lenders who all have varying minimum credit requirements. A good benchmark is that you’ll need a score of at least 620 to be approved.

Minimum isn’t ideal

While you may get approved for a loan with a low credit, this isn’t always a reason to celebrate.

Lenders use your credit score, among other things, to help determine the interest rate of your loan. A lower score often means a higher interest rate.

While 1 or 2 percent can seem like a small number, it can mean paying tens of thousands of dollars more in interest over the span of a thirty-year loan.

To illustrate the importance of one percent, consider the following. If you owe $200,000 on a home and intend to pay it over 30 years, you will pay $103,000 in interest at 3% and $143,000 at 4% – that’s a difference of $40,000.

Rather than shooting for the minimum credit score, a better approach would be to build credit while saving for a down payment. Someone with a credit score of 740 or higher will be seen by most mortgage lenders as an ideal person to lend to.

Of course, life doesn’t always allow for the ideal situation. So, do your best to save and build credit, and be sure to shop around for the best rates when you’re ready.

Another Property Sold – 88 Lafayette St Waltham, MA

This Single-Family in Waltham, MA recently sold for $512,000. This Colonial style home was sold by Ari Koufos – REALTY EXECUTIVES.








88 Lafayette St,



Waltham, MA 02453

Single-Family

$549,000
Price

$512,000
Sale Price

7
Rooms

4
Beds

1/1
Full/Half Baths

7 Room 4 Bedroom 1.5 Bath side entrance colonial located in top Rangely Acres location situated on a beautiful 9000+ sq ft of land. This home has been in the same family for many years and is awaiting a new owner. Living room with fireplace, formal dining room, good size kitchen. Second floor offers 4 bedrooms. Enclosed front porch, full basement for storage or future expansion. 2 Car garage with plenty of off street parking. Large yard perfect for entertaining or adding on to the home.

Similar Properties

Create Outdoor Living Spaces

Photo by Sonnie Hiles on Unsplash

You can extend your living area by activating your outdoor spaces. Whether your yard is large or small, you can create a spot to entertain, read, or just relax with these tips:

Seating

Most outdoor spaces can accommodate some type of seating option. If you’re working with a smaller porch space, try a hanging swing or a bistro table and chair. Add a dining table to a larger patio area or deck if you plan to host outdoor dinner parties or game nights. If you’re looking for something more relaxed and flexible, opt for outdoor living room pieces. Search for weather-resistant, modular options that can be easily rearranged.

Sun and Insect Protection

If you have an uncovered patio space, consider introducing a pergola or a canopy. These options offer protection from the sun and wind which will make your time outside more enjoyable, especially if you live in a warmer climate. A canopy can be beneficial because it will often include netting options that offer protection from mosquitos and other flying insects.

Introduce Light

Add some lighting to your space to boost evening ambiance or to accommodate outdoor dining and games. If you opt for a canopy or pergola, consider introducing strings of twinkle lights, placing candles on tables or installing bug-repellant torches. For something more substantial, you may introduce a firepit. Wood, natural gas, propane and gel fuel options are readily available. Select the source that works best for your location and budget.

Introduce Color and Texture

You can liven up your space with pops of color and texture. Some options could be an outdoor rug, bright cushions and pillows for your chairs or planters filled with flowers and foliage. Hang a mirror on a wall or fence to create the illusion of extended space and depth whether your space is large or small.

105 Holt St, Watertown, MA 02472 has an Open House on Sunday, Feb 16, 2020 at 11:00 AM








105 Holt St,



Watertown, MA 02472

Single-Family

$529,000
Price

6
Rooms

3
Beds

1
Baths

Remarkable opportunity to renovate this nice side entrance 6 room 3 bedroom 1 bath Colonial located in the sought after West End of Watertown near Waverley Sq. Roof and windows have been updated over time. Gas furnace has been replaced. First floor offers a traditional floor plan with Living room, dining room, & large eat-in kitchen. Second floor offers 3 bedrooms & 1 bath. Walk-up third floor perfect for future expansion. Nice deck with spacious back yard. Come visit and see the potential of this home.

Open House

Sunday

February 16
at
11:00 AM to 12:30 PM

Cannot make the Open Houses?

Location: 105 Holt St, Watertown, MA 02472    Get Directions