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Mortgage Rates And Credit Scores

Impact Of Mortgage Rates And Credit Scores

Higher Credit Scores Yields Lower Mortgage Rates

Mortgage Rates And Credit Scores

Mortgage Rates and Credit Scores go hand in hand. The lower your mortgage rates are, the higher your credit scores needs to be.  To get the best available mortgage rates, you need a 740 FICO credit score or higher.  Credit scores is what determines mortgage rates.  Credit Scores is the determinant of whether or not you qualify for a certain mortgage loan program.  You can have the best and highest income in the world but if you do not meet the minimum credit score requirement, you will not qualify for that particular mortgage loan program.

Minimum Credit Scores For FHA Loan

To qualify for a 3.5% down payment FHA home purchase loan, you need a minimum credit score of 580 FICO.  Anyone with credit scores of under 580 FICO, you need a 10% down payment.  Plus, anyone who has a credit score of 620 FICO or under, the debt to income ratio will get capped at 43%.  If you have credit scores of 620 FICO or higher, your debt to income ratio gets capped at 56.9% for a FHA Loan.  Mortgage Rates on borrowers with under 620 FICO is much higher than those borrowers with credit scores of 620 FICO or higher.  If your credit scores are lower than 600 FICO, you mortgage rates will be even higher.  To get the best mortgage rates on a FHA insured mortgage loan, you need credit scores of 680 FICO or higher.

Minimum Credit Scores To Qualify For A Conventional Loan

Minimum credit scores to qualify for a conventional loan is 620 FICO.  Anyone with a credit score under 620 FICO will not qualify for a conventional mortgage loan.  Conventional Loans are different than FHA Loans.  Conventional loan mortgage rates and credit scores have more of an impact than FHA Loans.  A 620 FICO credit score is considered pretty bad for a conventional loan and a conventional mortgage loan borrower will get a very high mortgage rate by having the bare minimum qualifying credit score of 620 FICO.  To get the best conventional mortgage rates, the conventional loan borrower needs a 740 FICO credit score.  Those home buyers seeking a conventional loan should review their credit report and credit scores way before hand they apply for a conventional loan and see if they can maximize their credit scores so they can get the best possible mortgage rates.

Jumbo Loans

Jumbo Loans are mortgage loans that exceed the maximum conforming loan limit of $417,000.  Any residential mortgage loan that is higher than $417,000 is considered a jumbo loan unless the property is located in a high cost area.  Many counties in California are located in high cost areas where the conforming limits are higher than the standard $417,000 conforming loan limits.  A conforming loan are residential 30 year fixed rate mortgage loans that conform to Fannie Mae and/or Freddie Mac mortgage lending guidelines.  Fannie Mae and Freddie Mac has set the maximum conventional loan limit at $417,000 in most area in the United States.  Many areas such as Chicago and its surrounding suburbs and areas like Miami-Dade County, Palm Beach County, Broward County have much higher loan limits on FHA Loans.  Conforming FHA Loan Limits has been lowered from $410,000 to $271,050 back in 2014.

How To Improve Credit Scores To Get Best Rates

There are a few quick tips on improving your credit scores to get the best mortgage rates on your home loan.  You should seek the advice of your mortgage loan officer and consult with him or her way before you are about to pull the trigger in a home purchase.  Improving and repairing credit does take time.  Paying down your credit cards can greatly remove your credit scores immensely.  If you have many derogatory credit items, you may want to seek an advice of a professional credit repair consultant.  If you have no credit or no credit scores, you may want to get several secured credit cards to improve your credit scores Check for errors in your credit report.  Mortgage loan underwriters will especially pay attention to late payments in the past 12 months .

Related> Recent Late Payment On Your Mortgage

Related> Recent Late Payment

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