A FICO score of at least 620 to 640 is the minimum for a home loan with most lenders, according to a survey conducted by purchasing a home on 2015 Institute Mortgage Requirements FHA loans in Texas. The FICO score needed to get a mortgage loan depends on the particular lender, and the score requirements vary over time with economic conditions. If you’re FICO score is below 620, however, you still have a chance to qualify for a mortgage. Classic loans Institutions making conventional loans – loans that are not insured by the government – usually follow the guidelines set by Fannie Mae and Freddie Mac, government-sponsored businesses that buy mortgages and bundle them for resale. Their guidelines set a minimum FICO score of 620 for most borrowers. Exceptions are sometimes allowed for people with a rare credit history or whose credit history is compromised.
Borrowers who cannot come with a minimum of 20 percent for a conventional loan must get mortgage insurance. In this case, they must also meet the FICO requirements of the mortgage insurance company. Depending on the insurer and the economic conditions, the FICO minimum may be as low as 620 or as high as 700 or higher, according to Lending Tree.
Impact on interest rates
You can get a mortgage with a score of 620, but you will probably have to pay a higher interest rate than those with higher scores. For example, if interest rates for borrowers with a score of 620 to 639 are 5.068 percent on a 30-year fixed mortgage, someone with a score of 660 to 679 may be eligible for a rate of 4.092 for cent of interest, according to the Fair Isaac Corporation, which calculates credit scores. As of 2015, most lenders give their best rate if you have a score of 740 or more, reports Bankrate.com.
FHA loans in Texas
You can meet the requirements for a FHA loans in Texas, if you have a FICO score of 500 or more, but you must pay at least 10 percent of if your score is less than 580. Lenders make their own rules, so that some require a FICO score of 660 or higher for an FHA loan, according to Lending Tree.
Get a mortgage with a low score
Credit scores of between 700 and 850 are good to excellent, according to Bankrate.com. Fair scores range from 650 to 699, while poor scores range from 600 to 649. Borrowers with passable or bad scores generally have more success in getting loans from FHA loans in Texas, and unconventional ones. Lenders feel safer doing these loans because they are insured by the government.
Nevertheless, you may also be able to qualify for a conventional mortgage with a low FICO score. Bankrate.com gives several suggestions to increase your chances:
· Do you have enough savings to pay for six months of mortgage payments?
· View a record of payments on time rent more than a year.
· Make a down payment of 20 percent or more.
· Contact several different lenders to find one that will work with you.