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Mortgage Guide

How to get a home loan

What's the minimum credit score I need to buy a home in 2019?


Question:

What is the minimum credit score I need to buy a home in 2019 and qualify for a mortgage? I have talked to several loan officers and realtors, and they all told me different things.

 

Answer:

The minimum credit score needed to qualify for a mortgage depends on the type of loan program you are looking at. That could be the reason you have received conflicting answers. The most common types of mortgage are Conventional, FHA, Jumbo, VA Loans, and USDA Loans. We’ll explain each briefly below and the minimum credit score needed to qualify.

 

Conventional:

Conventional loans make up the majority of mortgages in the US. They are also known as conforming loans, because they conform to specific guidelines set by Fannie Mae and Freddie Mac.

  • Minimum credit score is 620.

  • The maximum loan amount varies by geographical area. For 2019, it is between $484,350 and $726,525.

  • You can use a conventional loan to buy a primary residence, second home, or rental property.

  • Conventional loans are available in fixed rates, adjustable rates (ARMs), and offer many loan terms usually from 10 to 30 years.

  • Down payments as low as 3%.

  • No monthly mortgage insurance with a down payment of at least 20%.

  • Max debt-to-income ratio of 50%.

 

FHA:

An FHA loan is a mortgage issued by federally qualified lenders and insured by the Federal Housing Administration (FHA). FHA loans are designed for low-to-moderate income borrowers who are unable to make a large down payment.

  • Minimum credit score is 500 with at least 10% down.

  • Minimum credit score is 580 if you put less than 10% down.

  • The maximum loan amount varies by geographical area. For 2019, it is between $314,827 and $726,525.

  • Upfront and monthly mortgage insurance is required regardless of the Loan to Value.

  • FHA Loans are only available for financing primary residences.

  • Maximum debt-to-income ratio of 50% (unless mitigating factors justify allowing a higher DTI).

 

Jumbo:

A Jumbo Loan, also known as a Jumbo mortgage, is a form of home financing for whose amount exceeds the conforming loan limits set by the Federal Housing Finance Agency (FHFA). As a result, unlike conventional mortgages, it is not eligible to be purchased, guaranteed, or securitized by Fannie Mae or Freddie Mac. Every jumbo lender has their own set of specific requirements that you must meet in order to qualify.

  • Minimum credit score varies between 680 and 720 depending on the lender.

  • You can use a conventional loan to buy a primary residence, second home, or rental property.

  • Maximum debt-to-income ratio of 43%.

  • Minimum Down Payment of 10%.

  • You will need enough liquid assets available to cover a total of 6 months of mortgage payments (at a minimum).

 

VA Loans:

United States veterans have the chance to take advantage of one of the best mortgage programs on the market. Simply put - as a veteran, you'll pay less and qualify much easier. The Department of Veterans Affairs (VA) doesn't enforce credit score minimums for VA Loans. The minimum credit score is decided by the mortgage lender.

  • There is no set credit score issued by the VA.

  • Depending on your situation, NewCastle Home Loans accepts credit scores as low as 500. Other lenders average around 620.

  • Minimum down payment can be as low as zero.

  • Average debt-to-income ratio is appropriately 41%.

  • You can learn more about VA Loan requirements here.

 

USDA Loans:

USDA home loans are government-back mortgages through the United States Department of Agriculture (USDA) for borrowers to buy homes in rural communities. They offer lower rates and a minimal down payment. Similar to VA Loans, the credit score can vary from lender to lender depending on your personal situation.

  • The USDA does not issue a credit score minimum. However, having a credit score above 620 is ideal.

  • We will calculate the debt-to-income ratio for you. The USDA will take higher debt-to-income ratios if your credit score is about 680.

  • $0 minimum down payment and funds for closing costs.

 

Have more credit questions or need help?

Whether you have a low credit score or need to build credit, this isn't the end of the road. We can chat to go over your situation and see what you qualify for. Feel free to reach out to us at 855-610-1112 or myloan@newcastle.com with any questions.

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