Many potential home shoppers may feel that their credit score is not up to snuff to become homeowners. The truth is you can actually get a mortgage in some cases moderate, low and even no credit score at all.
After the great recession, the average credit score on a closed Fannie Mae mortgage went up to 755 in 2015 (according to CNBC) and has drifted down over the last few years. In 2017, Mortgage 1’s average credit score for the FHA program is 602. Mortgage 1 is happy to work with anyone regardless of where they fall on the credit score range.
Step #1 is to find out exactly where the borrower falls the credit scoring model that the two major mortgage underwriters Fannie and Freddie use. Many people get free credit scores online that are not accepted by Fannie or Freddie. The best way to do that is through Mortgage 1’s SNAP APP, where we not only pull a credit report but you can find out instantly if you qualify for a conditional mortgage approval.
If borrowers have had some credit mistakes in the past and are paying on time now they may be in better shape than they realize. Once they know their real FICO® credit scores, they will have a good idea of whether they’ll be approved for a mortgage.
However, while a minimum credit score of 620 means the chances are good for approval of a mortgage; borrowers may not get the same terms as someone with a FICO® score of 740. The tiers for credit scoring are usually broken down as:
Scores above 740 will likely get the lowest rate possible, provided other loan factors are also positive. Median scores of 680-720 will receive slightly higher rates that can depend on other circumstances, and scores below 660 receiving a higher pricing than those at the very top of the scoring range but still need to maintain an overall positive loan profile.