This post can get both you and me in a lot of trouble. So before anything else I should disclose that I am not a legal attorney nor a mortgage officer, and cannot give legal or financing advice.
Now let’s get to the point: what type of credit score do you need in today’s market in order to get a mortgage?
Every lender is different, because they have different standards imposed by their investors who actually buy the notes after your home loan is closed and you buy the property.
That being said, the normal guideline as of November 2010 is around 680 for a minimum credit score to qualify for a mortgage. Remember–that’s the MINIMUM they require, and that number could change tomorrow, so please don’t quote that number as the gospel truth!
Some programs (such as Minnesota Housing or City Living in the twin cities) may be higher than that, so it really depends on what type of financing you’re going to get. Using a Conventional Loan (as opposed to an FHA Loan) used to be the best way to go, but in today’s world of ever-changing laws and regulations it’s anyone’s guess as to where things will be in a few months or a few years down the road. Right now FHA has the edge for most buyers because of their low down payment requirements and the ability to use other state and local bond programs.
Another thing to note is that the middle credit score of your 3 reporting agencies will be the one that the loan officer has to use. So if your Equifax, Experian, TransUnion report 670, 690, 705 respectively then the lender will use 690 as your score.
You may wonder why the different agencies have different credit scores for you. It does seem a little weird that they would all be slightly different, but the reason why that happens is because certain credit companies only report to select credit agencies. So each report is slightly unique with some of your accounts missing or weighted differently. That’s why they want to see all three.
Don’t get too hung up on that fact–just realize that your middle score is the one that matters.
If you are curious to find out what your scores are and what is being shown on your credit reports just come to our next monthly seminar–we can pull your credit reports and scores at no cost to you and help you determine if buying a home in the near future is possible or not. It’s a great way to start the home buying process if you’re a first time buyer–getting educated first!
