Home › Questions › Home Loans › How Much of a Home Loan Can I Get with a 650 Credit Score?
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September 30, 2024 at 4:33 pm #1002
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KeymasterSeptember 30, 2024 at 5:07 pm #1036Kikoff
KeymasterThe higher your credit score, the better the chances you’ll qualify for a loan with good interest rates. 650 is a decent credit score, but you definitely have room for improvement. If you know you will be looking for a home loan soon, start building your credit as soon as possible. There’s no simple plug-and-play formula for credit scores, interest rates, and what you’ll get from a lender. The best option is to shop around and pick the best rate available.
Here is how to build your credit, so you can potentially qualify for a better home loan.
Lenders look at a lot of factors when you apply for a loan, these are 3 important ones:
- Income: A higher income and a steady paycheck can help you secure a better loan. Having money coming in consistently shows you can pay back debts.
- Debt-To-Income Ratio: The money you bring in compared to how much you owe
- How much debt you have compared to how much income you have. The lower your debt, the better. This includes debts like loans and credit cards.
- Down Payment: A larger down payment, like 25% makes you more attractive to lenders. But it also means you’ll need more of the money upfront.
Different kinds of loans come with different pros and cons:
- Federal Housing Administration (FHA) Loans: These loans are typically more accessible, but come with mortgage insurance, which can add to the total cost.
- Conventional Loans: The typical loan. You can make yourself more attractive to lenders by committing to a large downpayment (like 25%), but you’ll have to have more money in your pocket initially.
- VA Loans: Loans for veterans and active service members. These have no official minimum required score to qualify, but as usual, the higher your score, the better.
Need to build credit?
Kikoff is a credit-building app that can help you establish a positive payment history through their Credit Builder account. Plans start at $5 a month, and even have an Autopay feature, so you can build credit in the background. Kikoff has no credit check, hidden fees, or interest. Sign up in minutes and start building credit faster.
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