For many first time homebuyers, credit scores may be lower than they would like. Younger home buyers may not have a credit history to build a higher score. Â Mortgages are still available to those with lower credit scores.
FHA requires a 580 score in most cases, some lenders may have a requirement of a 620 score. FHA allows you to use gifts for down payment and the seller can contribute towards the closing costs. Â The monthly mortgage insurance will be lower for most with FHA than a conventional loan if you have a low credit score. All these items make FHA a great mortgage for those with lower scores.
USDA has a zero down program for homebuyers that are buying in rural areas, usually you need a minimum of a 620 score and you need to get an automated approval. The USDA guarantee fee is lower than FHA so it can be a good option for those buying in rural areas.
Conventional loans have some options for lower scores – the Home Ready program will allow you to buy with a score of 620 as long as you have an automated approval. The mortgage insurance will be higher than FHA but slightly lower than a regular conventional loan. Plus Home Ready and Home Possible only require 3% down and it can be gift money.
Talk to your loan officer and see what your options are. There may be a program that you can use today while rates are still low.
Leslie Vanderwerf, NMLS ID#335509, American Mortgage & Equity Consultants, Inc., An Equal Housing Lender, NMLS#150953 – Email – Website
