What Credit Score is Needed for a Home Loan?

Home Questions Home Loans What Credit Score is Needed for a Home Loan?

  • This topic is empty.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • #1008
    KikoffKikoff
    Keymaster
    #1030
    KikoffKikoff
    Keymaster

    When it comes to buying a home, your credit score plays a huge role. Lenders use this score to determine your eligibility for a loan, as well as the interest rates and terms you’ll be offered. The higher your credit score, the better your chances of getting approved with better terms.

    Credit Score Requirements Based on Loan Type:

    • FHA Loans: The Federal Housing Administration (FHA) are government-backed loans. They’re known for being more forgiving of lower credit scores. In most cases, you can qualify for an FHA loan with a credit score as low as 580, and sometimes even lower if you’re able to make a larger down payment (around 10%).
    • Conventional Loans: For conventional loans, which aren’t backed by the government, lenders typically require a minimum credit score of 620. If your score is higher than that, you’ll likely be offered better rates and terms, but 620 is generally the cutoff for most lenders.
    • VA Loans: If you’re a veteran or active-duty service member, VA loans are a great option. The Department of Veterans Affairs doesn’t set a minimum credit score, but most lenders prefer to see a score of 620 or above, with some willing to go as low as 580. This makes VA loans accessible for many borrowers with lower credit scores.

    How Credit Scores Affect Interest Rates and Loan Terms

    • Higher Credit Scores Lead to Lower Interest Rates: Borrowers with higher credit scores (in the 700s or 800s) tend to qualify for lower interest rates. For example, someone with a score of 760 might secure an interest rate below 4%, while a borrower with a score closer to 620 could see rates above 5%, or even higher. Over the life of a 30-year mortgage, that difference can add up to tens of thousands of dollars.
    • Better Terms for Higher Scores: In addition to lower interest rates, a higher credit score can unlock more favorable loan terms. This might mean smaller down payments, fewer fees, or even avoiding private mortgage insurance (PMI) altogether, which can save you a significant amount of money.

    Conclusion

    When it comes to home loans, your credit score is one of the biggest factors that lenders consider. FHA loans are available to borrowers with scores as low as 580, while conventional loans usually require a score of at least 620. The higher your score, the better interest rates and loan terms you’ll likely receive. Before you apply for a mortgage, it’s worth checking your credit score and working to improve it if needed, as this could save you a lot in the long run.

    Kikoff Can Grow Your Credit!

    Kikoff is an easy and affordable way to start growing your credit, on average, users with credit 600 saw a +28pt* improvement in their first month! Starting from $5 a month, you can easily grow your credit with Kikoff, with no credit checks, no hidden fees, and no interest. Sign up in minutes and start growing your credit now for better home loan terms and interest rates!

    *First-month credit score impact of +28 points in a first month based on observed changes in Equifax VantageScore 3.0 for Kikoff users with starting credit below 600 who made at least one purchase with Kikoff Credit Account & one-on-time payment between Jan-2021 & Mar-2024. Late payments may negatively impact your credit score. Individual results may vary.

Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
The information provided in this blog post is meant for informational purposes only and does not constitute financial advice. Kikoff Inc. is a financial technology company and not a bank. The Kikoff Secured Credit Card is issued by Coastal Community Bank, Member FDIC. Terms and conditions apply & individual results may vary. Make consistent on-time payments to maximize credit building potential.  Credit factors outside Kikoff, like other account balances or delinquencies, can have an impact on credit building progress.  Subject to approval via identity verifications and subject to terms and conditions. Kikoff Credit Account reported line of credit intended exclusively for credit building purposes & can be used to finance the purchase of monthly Credit Service plans and/or digital educational material via the Kikoff Store. For more information, visit our Terms and Conditions and Privacy Policy. We report to the major credit bureaus: Equifax, Experian, and TransUnion. Features, tradelines, bureau reporting, & pricing may vary depending on plan purchased. This post may contain marketing messages and advertisements in compliance with the CAN-SPAM Act. Please refer to our Secured Card and Credit Account Terms for detailed product disclaimers.

Latest questions

Home Questions Home Loans Topics

Viewing 15 topics - 1 through 15 (of 45 total)
Viewing 15 topics - 1 through 15 (of 45 total)