If you have a low credit score, do not let it discourage you from purchasing a home. You may still be able to qualify for a mortgage loan. Although it may be a little more difficult, it is possible! A low credit score is between 300 and 579. This is considered to be a poor credit score. A fair credit score is between 580 and 669. The most common type of home loan, which is a conforming mortgage, accepts credit scores starting at 620. Other programs require as low as 580. As you can see, it is possible! There is no magic number when it comes to a minimum credit score. It depends on the lender.
If you have a low credit score, there are some things you can do to increase your odds of purchasing the home of your dreams. One of these ways it so pay as much cash as you are able to! This cash would go toward the down payment. If you have a significant down payment, the odds of you being approved for a loan increase. You will not be classified as much of a risk with a decent down payment.
When you do get a home loan, your credit score will be increased as long as you make your payment on time and pay the correct amount. Once you have raised your credit score enough, you have the ability to refinance if that is something that would benefit you. This may help you lower both your mortgage rate and monthly payment.
If you do have a lower credit score, please realize that your mortgage interest rate will be more than someone who has a higher credit score. Make sure you budget this appropriately and keep this in mind. We are not telling you this to scare you but to be sure you are doing things to increase your credit score and plan accordingly. We want everyone to have the house of their dreams!