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Mortgage Products Accepting Lower Credit Scores

Your credit score plays a critical role in the mortgage process, but it is not the only factor used to determine loan approval.  Mortgage lenders combine credit score with your down payment, current debt load and income to determine your ability to repay. Programs and products exist that are flexible to these factors. A higher down payment or lower debt-to-income ratio may offset a lower credit score.

Here are some options available to you:

Conventional Loans
Qualification for a conventional loan is based on multiple factors and a credit score of 620 is standard. However, you may be able to go below 620 or 600 if other qualifying factors appear strong.
Conventional loans are very popular and frequently offer lower costs that other types of loans.

FHA Loans*
An FHA loan is guaranteed by the Federal Housing Administration which allows a lender to accept a lower credit score. The minimum credit score for an FHA loan is around 580. If you can make a 10% down payment, a lender may go below 580.

FHA loans are designed to assist first-time home buyers or those who have not purchased a home in the last 3 years. This loan type is not available for second homes or rental properties.

VA Loans
If you or your spouse are or have served in the U.S Armed Services, you may qualify for a Department of Veterans Affairs loan. This loan is guaranteed by the VA and provides a valuable benefit for those that have earned it. Typically, this loan does not require a down payment which makes it attractive.  A 580-credit score is acceptable. It is important to remember that other factors will be applied to determine your ability to repay.

Summary
Do not let the past stop you from buying a home. Our team is available to provide credit counseling to help you take the correct steps to correct or build a better credit score.  We can combine a variety of product features to create a solution to help you reach your financial goals. Its best to speak with a member of our mortgage team to determine your best options.
 
*Premia Mortgage, LLC dba Premia Relocation Mortgage is an FHA Approved Lending Institution and is not acting on behalf of or at the direction of HUD/FHA or the Federal government.




 
- Jun 07, 2021



 
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