Minimum Credit Score By Mortgage Loan Type
The minimum credit score you need to qualify for a mortgage in 2020 depends on the type of mortgage you’re trying to obtain. Scores differ whether you’re applying for a loan insured by the Federal Housing Administration, better known as an FHA loan; one insured by the U.S. Department of Veterans Affairs, known as a VA loan; or a conventional mortgage loan from a private lender:
|
Type of loan |
Minimum FICO® Score |
|
Conventional |
620 |
|
FHA loan requiring 3.5% down payment |
580 |
|
FHA loan requiring 10% down payment |
500 – Quicken Loans® requires a minimum score of 580 for an FHA loan. |
|
VA loan |
No minimum score. However, most lenders, including Quicken Loans, will require that your score be at least 620 |
Conventional Mortgages
Conventional mortgages are home loans that follow the standards set by Fannie Mae and Freddie Mac. They’re uninsured by any government agency.
If your credit score is solid – most lenders consider FICO® Scores of 740 or higher to be excellent ones – you’ll usually be able to qualify for a conventional loan with a low down payment requirement and low interest rate.
Conventional loans are typically best for those with good or excellent credit, as these loans require a higher credit score than an FHA loan.
These loans tend to offer the most competitive interest rates and flexible repayment periods, such as 15- and 30-year mortgage terms.
Minimum Credit Score Needed: At Quicken Loans, your credit score for a conventional loan must be 620 or higher. Various lenders have different requirements and may require a different score.
FHA Loans
FHA loans are insured by the Federal Housing Administration, making them less risky for lenders and, because of this, easier to qualify for than conventional loans.
They offer down payments as low as 3.5% and low-equity refinances, which allow you to refinance up to 97.75% of your home’s value.
FHA loans can benefit borrowers with lower credit scores or those who spend a significant portion of their income on housing. Current homeowners who are underwater on their mortgage – and could lower their monthly payment by refinancing – may also benefit from an FHA loan.
Minimum Credit Score Needed: You’ll need a minimum credit score of 580 to qualify for an FHA loan that requires a down payment of just 3.5%. There is no minimum FICO® Score, though, to qualify for an FHA loan that requires a down payment of 10% or more.
However, FHA loans are originated by private lenders, and these lenders will usually have their own minimum credit score requirements. For instance, the minimum FICO® Score for an FHA loan through Quicken Loans is 580.
For a standard FHA loan, a minimum of one credit score is required to qualify. If your lender obtains all three of your credit scores, it will…
Read More: What Credit Score Do You Need to Buy a House in 2020?
