With lending requirements becoming more strict, you may be wondering how difficult it will be to acquire a loan and whether your credit score is high enough to qualify for a mortgage. Although tightened lending standards can seem more stressful for buyers, there are still many options available to borrowers with lower credit scores.
Building a strong credit score is a sign of greater financial stability. The average American has even seen an increase in their credit score, signifying a higher level of financial health. With Americans achieving higher credit scores and securing a distinguished financial future, more homebuyers are making the decision to enter the market.
Your credit score provides a quick glimpse into your overall credit health, so a higher credit score is an indicator that you’ve responsibly managed your credit in the past. As a result, the higher your credit score is, the less risky you’ll appear as a borrower and the more confidence lenders will have that you’ll repay your debts as agreed.
Having a lower credit score may seem worrisome and can cause fear that you might not be able to qualify for a mortgage loan. But, there are many options available to you even if your credit score is lower than 750. There are alternative courses of actions to take into consideration for people with lower credit scores attempting to enter the housing market. If you are looking to purchase your dream home, Experian has provided statistics to help if you have a lower credit score and wish to acquire a loan:
- Federal Housing Administration (FHA) loans: “With a 3.5% down payment, homebuyers may be able to get an FHA loan with a 580 credit score or higher. If you can manage a 10% down payment, though, that minimum goes as low as 500.”
- Conventional loans: “The most popular loan type typically comes with a 620 minimum credit score.”
Higher credit scores will give you more opportunities and better terms when applying for a mortgage, especially with lending terms becoming more strict. If you are planning to make a move in the market, speaking to a trusted real estate agent will help you to acquire your dream home. A Seven Gables Advisor will assist you in the next steps to take to improve your credit score and position you in the best possible situation to purchase a home. Don’t rule yourself out if you have a lower credit score, today’s market is full of opportunities to help you. Let’s connect today to discuss the best options to allow you to reach your homeownership goals!