What Credit Score Do You Need to Have to Take Out a Mortgage?

You're in a position where you are building up or re-building your credit, and you're interested in taking out a home loan. You may be asking, "What does my credit score need to be before I can qualify for a mortgage?" There's a general range that puts you in the home loan waters for smooth sailing and a little give in a lower range for rougher waves. The bottom line is that you do need a half-way decent credit score in order to get home. However, there are programs that can help you if your score isn't the best.

The Scores You Need

In general, it is safe to say that a credit score of at least 670 is necessary to take out a traditional mortgage. Some say that a lower score (high 500s to low 600s) can qualify you for certain programs. These programs are typically a little trickier to navigate. For example, although you might qualify for an FHA loan with a lower score, and this type of loan requires less of a down payment, you might be mandated to take out additional insurance (PMI).

Additional Fees?

The weight of carrying this type of home loan can be heavier, but it can allow you to get a home. If you know that your score should increase in a year or two, it might be better to wait. On the other hand, if you feel sure that your score will stay around the same, it might be better to go for the additional costs in order to get the home of your dreams

You Need to Search Around

So, it's safe to say, in order to avoid extra stress, you should have a credit score of 670 or above before you apply for your first mortgage loan. After this, make your payments on time so that your score continues to increase. A higher credit score always equals a lower interest rate when it comes to financing. Be sure and check with your lenders to see which ones will give you the best deal with your credit score.