Acceptable Credit Score For Home Loans

Many times due some delays in paying our bills or the credit card payments, we have a bad credit score. Some have has this problem to the extent that they had to file bankruptcy to save them selves. Now these people have a tough time applying for home loans and FHA loans. There are three major agencies that allot credit scores in the US. On the top of them all is FICO.

What is FICO score?

Fair Isaac Corporation (FICO) assigns score between 300 and 850 to the person that describes his / her credit worthiness. That is the FICO score. This score would decide the rate of interest you will have to pay on any credit or loan. The higher the score, the more is your credit worthiness. Hence you shall land up paying less. And the reversal of this applies for the bad scorers.

What is the minimum FICO credit score requirement to get a mortgage loan?

One thing you must understand is that there are no preset rules in this regard. Basically there are some thumb rules that guide such applications. Nothing here is hard & fast. Various loan programs require different levels of minimum acceptable credit scores. When it comes to home loans at the end it is the mortgage company's own wish if they want to give you the loan or not.

VA or FHA loans = 580 or more
USDA loans = 620 or more
Conventional loans = 720 or more

On an average, the persons who are above 620 in their score do not have much difficulty. It won't be wrong to say that it is a safe limit and one should try never to fall below that.

Do I have any ray of hope to a home loan?

With the new Stimulus Package, the Federal Government is giving out FHA loans and VA loans quite liberally. They understand that people are going through a tough time and having low credit scores is quite understandable. The new law has not set any minimal acceptable credit score. So you can actually get lucky and get a loan. For this you may contact the counselors appointed by US Federal Housing & Urban Development (HUD) Department.

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