Even if you think your credit score is low, there are plenty of ways you can still become a homeowner. Here’s why.

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I’m joined today by Brian Maier of Mortgage Box to give the answer to a big question many people have: What kind of credit score do you need to purchase a house?


There’s a lot of misleading information online when it comes to credit scores. Each lender uses different restrictions and overlays when it comes to approving a loan—ideally, you’ll want to have a credit score of 620 or higher.


However, there are programs that accept scores of 580, and some even accept scores as low as 500.

If your score is over 700, it usually makes the most sense to go with a conventional loan. These loans are driven by credit scores; 740 and higher is the top tier, but for each 20-point increment that your score drops, your interest rate rises. This goes all the way down to 620 for a conventional loan.


"There are programs that accept scores of 580, and some even go as low as 500."


Below this, you have to start looking at FHA and VA loans. FHA loans aren’t based on credit score when it comes to pricing—the interest rate is the same, regardless of a 600 score or an 800 score. Depending on your score, there’s a point where it may make more sense to take an FHA loan over a conventional loan.


If your score is under 580, an FHA loan typically requires additional compensating factors—a 10% down payment, for example. If you’re over 580, you can still put 3.5% down on an FHA loan.


Credit-monitoring companies like Credit Karma can be a little misleading; there are many credit scoring models out there, but lenders use FICO scores. While your Credit Karma score may be 580, our report could say 620. The opposite could also be true, but you can’t know for sure until you speak with a lender.


I’d like to thank Brian for giving us some great insight into how credit scores relate to loan programs. Feel free to give him a call at 702-432-5626 or email Info@MortgageBoxNV.com.


And if you have any other questions or need more information, reach out to me. I look forward to hearing from you soon.