Credit Repair

Minimum Credit Score To Obtain A Mortgage Loan

There are several factors that are taken into account to determine the minimum credit score to obtain a mortgage loan. The qualifying criteria may vary significantly from one lender to another. First of all, it is very important for you to understand that your credit history is not the only thing that your prospective lenders look into in order to determine your eligibility for a specific mortgage loan. Other factors that also play an important role in this regard include the amount of money you are paying as down payment, your employment status and history, your residential status, and an array of other such things. Besides that, things also depend on which type of mortgage loan you are applying for. Following is a brief rundown on some of the different types of mortgage programs available out there and their basic requirements related to minimum credit score.

Credit Rehabilitation

The requirements related to minimum credit score to obtain a mortgage loan are usually not very difficult for those who are looking out for credit rehabilitation programs. Mortgage lenders usually ask the loan applicants to provide a proof of a decent repayment history (at least for a period of two years). These types of borrowers are the ones who cannot provide such proof. The credit rehabilitation programs can prove to be very helpful for such consumers, as it provides them an opportunity to settle their existing debt accounts faster and to improve their credit worthiness by using other strategies. If you are also in a similar kind of situation, these programs can help you qualify for a good deal in mortgage loan within a period of six months. This wait period is important to achieve the kind of minimum credit score required to qualify for a mortgage program. However, this will happen only if you show some great financial discipline throughout that period and work promptly as per the credit rehabilitation plan.

Conventional Mortgage Programs

The minimum credit score to obtain a mortgage loan through conventional programs is 680. The higher score you have, the better are the chances to qualify for lower rates and more favorable terms. The minimum credit score requirement in this case is a little higher as compared to what is required in VA and FHA loans. It happens because there is a higher risk of default in conventional mortgage programs. Besides that, unlike VA and FHA loans, the possible loss of the bank is not backed by any government in conventional loans.

VA Loans

There are no specific requirements related to minimum credit score to obtain a mortgage loan if you are applying for a VA loan. However, there are still some legal provisions that you must be aware of. For example, if your score is below 620, your application will have to go through a manual underwriting process (under the supervision of an independent VA underwriter) where you will be required to provide more documents in order to determine if you are still an eligible veteran. In general, if the authorities do not trust your ability to repay and your credit report does not justify credit worthiness, your application is very likely to be rejected.

FHA Loans

The basic things related to minimum credit score to obtain a mortgage loan are similar to what is applicable in case of VA loans. Though there is no such minimum requirement as per the FHA underwriting guidelines, consumers with credit score below 620 usually are quite unlikely to qualify. With a score of 320, your application is very likely to be approved automatically provided you meet other qualifying criteria. Similar to what happens in case of VA loans, consumers with a score below 620 have to go through the underwriting process, where additional documentation will be required. The process of manual underwriting usually takes around one month, but there is no guarantee that your application will be approved even though you successfully provide additional documents.

If you are not sure whether you meet the basic requirements related to minimum credit score to obtain a mortgage loan, you are advised to consider discussing your situation with a mortgage loan officer or a Realtor. Expert advice sometimes can prove to be very helpful, as they are professionals who can guide you properly on how you can improve your chances to qualify for a good mortgage program.

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