Will My Credit Score Allow Me To Buy A Home?

You can probably buy a home even with a lower score, but youll have different options than someone with a higher one.For FICO scoring models that top out at 850 some models go higher heres what you can expect based on your credit score range:

500 579: Poor credit score mortgage programs

If you have a credit score in the 500s, its likely that your best choice for a home loan will be one insured by the Federal Housing Administration. But with a credit rating of 500 to 579,be prepared to put 10% down.

Someone with a 500 credit score is likely to have some combination of collection accounts, liens and judgments, Joe Parsons, a senior loan officer with PFS Funding in Dublin, California, says. Even though FHA will insure a loan with a 500 score, the lender will require that collections, judgments and most liens be paid off before closing.

580 619:Some low down payment programs

TheFHAalso allows loans with down payments as low as 3.5%, but to qualify, youll need a FICO score of 580 or better. Some lenders will also authorize mortgages guaranteed by the Department of Veterans Affairs, commonly calledVA home loans, at this level.

620 699: Government-backed and conventional options

Potential home buyers with credit scores of at least 620 have more options. VA-backed mortgages definitely come into play. That can mean you wont make a down payment and youll pay very favorable interest rates. USDA-backed loans are also available to those with a minimum 640 score.

FHA loans for remodeling, known as203(k) loans, are underwritten at this FICO score level.

Most importantly,conventional loans the mortgages lenders like best are available to qualified borrowers with credit scores of 620 or higher.

700 739: Good credit score mortgage programs

Home buyers with credit scores of 700 or greater qualify for better mortgage interest rates, as well as for higher value homes thatrequire jumbo mortgages.

740 and above:The bestinterest rates

With a FICO score of 740 or higher, youre likely to get the most favorable interest rate available, especially on a non-jumbo, conventional loan.

Borrowers with higher scores also earn a break in the cost of private mortgage insurance if they make down payments of less than 20%. Parsons says with a 10% down payment, a 620 borrower will pay 1.1% in PMI. A 760 FICO borrower would pay just 0.30%, he adds.

Of course, every lender has different underwriting standards, so credit score qualifications can vary. And your ability to repay plays the most important role in getting approved for a home loan. To determine that, lenders reviewyour monthly income minus your recurring debts (your debt-to-income ratio), as well as how much money youre putting down (loan-to-value).

Having money in a savings account beyond what youll need for the down payment and closing costs can also work to your favor.