whwt credit score is needed to buy a house

What Credit Score do you need Buy a House in Florida

Buying a home in Florida is not something you can do overnight. There is a lot of work entailed in the home buying process. You not only have to find the perfect home for you and your family, but you also have to find the right mortgage loan. If you’re ready to see what you can afford, get started by getting a rate quote, for free.

See How Easy it is to Get Your Custom Rate!
Watch Now

Try Our Down Payment Calculator to See Which Loan Programs Might Work for You!

There are various factors that a lender looks at to decide what kind of rates you’re eligible for, and if they should sanction the loan for you. For example, they will take a look at your income, debt, debt to income ratio, savings, and also your credit score to decide if they should approve or reject your application. Before you even start the house hunting process, it may be a good idea to take a look at where your credit score stands, and see if there is anything you can do to improve your credit score. 

First off, how are credit scores determined in Florida? Also known as FICO score, your credit score is determined by five factors. They are: your credit payment history, your amount owed, the length of your credit history, new credit and the type of credit used. The most influential item is your credit payment history which carries 35% weight of your credit score followed by the amount owed at 30% and then the order proceeds as stated above, with each of the remaining items boasting a weight of 15%, 10%, and 10% respectively, that completes your credit score computation. 

So, in Florida, how much is the credit score required for you to buy a house? As mentioned already, the exact score needed to buy your home varies from one loan to another. This may depend on the loan amount you will get and the type of loan you are applying for. The chance to get a mortgage gets slimmer if you have a lower credit score from credit bureaus. Generally, the loan with the lowest credit score requirement is a portfolio mortgage loan. Most of them require a minimum credit score of 500. A VA loan usually requires at least a 530 credit score. An FHA loan will require a FICO score of 580 and higher, while a USDA loan, jumbo loans and conventional loans (Fannie Mae and Freddie Mac loans) are the highest with a minimum credit score of 620 or higher.

The Department of Veterans Affairs does not impose minimum credit score requirements to qualify for a mortgage, but the mortgage lenders who make the loan do. VA loans are insured by the federal where they guarantee a portion of each loan and do not require private mortgage insurance. It has 15-year and 30-year terms and offers lower interest rates. 

FHA loans are government backed mortgage loans. FHA loans are backed by the Federal Housing Administration under a government agency, the Department of Housing and Urban Development. FHA credit requirements depends on the type of home loan you are applying for. FHA loans require a 3.5% down payment for 580 and higher credit scores. If you can make 10% downpayment for your FHA loan, credit score needed can be in the 500-579 range. 

The US Department of Agriculture or USDA offers home loans for low-to-moderate-income home buyers. USDA has three credit types: direct loans, housing repair loans, and guaranteed loans. Many lenders that offer USDA loans require a minimum of 640 FICO score. 

Conventional loan is a loan type that is not government backed, so lenders are at greater risk. If you need to buy a home, a conventional type of mortgage can be tough to obtain. The minimum fico score needed for a conventional loan is an average of 762. 

If your score is low, the good news is that you can improve your credit score in a very short period. Here is how:

Keep your credit card balances as low as possible
You can opt to make small frequent payments for your credit card throughout the month. This will help you keep your credit card balances low and improve your credit utilization in your credit report. There are credit cards that give free fico scores.

Only take credit that you can repay
To put your low credit scores away from more risk, take credits that you know you can afford to pay over time. Getting credit with no guarantee that you can make payments during its term will hurt your financial standing and your credit report significantly.  

Pay your bills on time
Credit history bears the largest percentage in the computation of your credit scores, late payments can reflect on your credit report for up to seven years. If you miss a payment for 30 days or more, call the creditor to arrange your payment.  Ask if the creditor will consider not reporting your late payment to the credit bureaus. If the creditor won’t allow it, showing a lot of positive credit behaviors to offset the damage can be your option in improving your credit.

Stay away from high-interest credit
Higher interest rate credit requires higher payments. You might need emergency money from credit but look for alternative loan types than risking on high interest credit. 

Check your credit reports frequently
An error on your credit report could be the reason for your low credit score. Fixing these disputes will quickly improve your credit scores.  

For more on how to handle your credit and increase your credit score talk to us today, we offer free credit reports. Don’t let your FICO scores be the reason why you can’t own your dream home in Florida.