What Credit Score Do I Need for a Home Loan?
For example, your FICO score requirements for an FHA manufactured home loan may be lower than those who want to build a home from the ground up using a One-Time Close construction loan.
Construction loans are higher-risk transactions than manufactured homes, so the FICO score requirements from your lender are likely to be different. What FICO scores do you need to be approved for a home loan? Let’s examine the different types of mortgages below.
Conventional Purchase Loan FICO Score Requirements
Homebuyer.com recommends a FICO score of 620 or better for conventional mortgages. Conventional mortgages are more common, but they require private mortgage insurance unless you put 20% down or more.
Some conventional mortgages may feature a penalty for early payoff of the loan through larger payments or refinancing. You’ll need to check the fine print on the loan you want. FICO scores of 620 are typical for conventional loan approval.
USDA Purchase Loan FICO Score Requirements
USDA loans are typically need-based government-backed mortgages and may feature income caps and purchase price restrictions. Homebuyer.com reports USDA loans require zero down, and the minimum FICO score to qualify is 580.
VA Home Loan FICO Score Requirements
The Department of Veterans Affairs has no specific FICO score listed in its guidelines, the lender is responsible for setting the minimums, which typically start at 580. There is no downpayment for the loan in typical cases, and no private mortgage insurance is required.
Borrowers who seek VA mortgages with non-VA borrowers may do so but only the veteran’s portion of the loan can be guaranteed by the Department of Veterans Affairs.
FHA Purchase Loan FICO Score Requirements
Homebuyer.com erroneously reports, “FHA loans don’t require home buyers to have a credit score at all, although many lenders want to see a minimum score of 580.”
However, according to the FHA Single Family Lender’s Handbook, HUD 4000.1, FHA loan rules DO specify a minimum FICO score amount.
580 is the minimum FICO score you need according to the FHA to qualify for the lowest down payment. Lender standards will also apply.
You may have difficulty finding a lender willing to approve a purchase loan if your FICO scores aren’t at least in the 580-or-better range. Typical FHA loan approval happens for scores closer to the 620 range, depending on the lender.
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