Which FICO score do mortgage lenders use?
The most commonly used FICO Score in the mortgage-lending industry is the FICO Score 5. According to FICO, the majority of lenders pull credit histories from all three major credit reporting agencies as they evaluate mortgage applications. Mortgage lenders may also use FICO Score 2 or FICO Score 4 in their decisions.
While the FICO® 8 model is the most widely used scoring model for general lending decisions, banks use the following FICO scores when you apply for a mortgage: FICO® Score 2 (Experian) FICO® Score 5 (Equifax) FICO® Score 4 (TransUnion)
To access the best mortgage interest rates, aim to have a credit score at least in the 700s. How do current average mortgage rates compare to last year? It indicates an expandable section or menu, or sometimes previous / next navigation options.
Simply put, there is no “more accurate” score when it comes down to receiving your score from the major credit bureaus.
Lenders use a different credit scoring model
Mortgage lenders, on the other hand, pull FICO scores from the three main credit bureaus — Equifax, TransUnion, and Experian — and use the mid score. Mortgage lenders use a tougher credit scoring model because they need to be extra sure borrowers can pay back large debts.
Generally speaking, you'll likely need a score of at least 620 — what's classified as a “fair” rating — to qualify with most lenders. With a Federal Housing Administration (FHA) loan, though, you might be able to get approved with a score as low as 500.
Most lenders consider a score of 740 or higher to be excellent. However, the credit score needed to buy a house using a conventional loan can be as low as 620. For a government loan, like an FHA or VA loan, a minimum credit score of 580 is required by most lenders.
Federal Housing Administration (FHA) loans need at least a 580 FICO Score with at least a 3.5% down payment (which amounts to $10,500 on a $300,000 home). Conventional loans require a minimum FICO® Score of 620 along with a 3% down payment (which amounts to $9,000 on a $300,000 home).
You'll typically need a credit score of 620 to finance a home purchase. However, some lenders may offer mortgage loans to borrowers with scores as low as 500. Whether you qualify for a specific loan type also depends on personal factors like your debt-to-income ratio (DTI), loan-to-value ratio (LTV) and income.
Most mortgages, including conventional loans, require a credit score of 620 or higher. It's possible to get an FHA loan with a credit score as low as 500, but many lenders require higher scores. Borrowers with higher credit scores get better rates and terms than those with low scores.
What is a good credit score to buy a house?
To buy a house with a conventional loan, for example, you'll need at least a 620 credit score. But don't worry. Even if your credit score hovers somewhere in the 500 – 600 range, you can still secure a home loan. While every lender is different, knowing your score and how it may impact your loan application is key.
Why is my FICO® score different from my credit score? Your FICO Score is a credit score. But if your FICO score is different from another of your credit scores, it may be that the score you're viewing was calculated using one of the other scoring models that exist.
Why is my FICO score higher than my other credit scores? Every credit-scoring model is different. And credit scores can change based on what credit report is used to inform the model. Those variances can make some scores higher or lower than others.
- Conventional Loans Minimum Credit Score: 620. ...
- Jumbo Loans Minimum Credit Score: 700. ...
- FHA Loans Minimum Credit Score: 500. ...
- VA Loans Minimum Credit Score: 620. ...
- USDA Loans Minimum Credit Score: 580.
FICO 8 scores range between 300 and 850. A FICO score of at least 700 is considered a good score.
PenFed Credit Union is the only loan company that uses only your Equifax credit data. In most cases, you won't be able to determine beforehand which credit bureaus your lender will use. In some cases, lenders will pull your credit report from two or even all three major credit bureaus.
You can borrow $50,000 - $100,000+ with a 720 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.
For other types of credit, such as personal loans, student loans and retail credit, you'll likely want to know your FICO® Score 8, which is the score most widely used by lenders.
- Make your payments on time. ...
- Set up autopay or calendar reminders. ...
- Don't open too many accounts at once. ...
- Get credit for paying monthly utility and cell phone bills on time. ...
- Request a credit report and dispute any credit report errors. ...
- Pay attention to your credit utilization rate.
Most conventional loans are backed by mortgage companies Fannie Mae and Freddie Mac. Fannie Mae says that conventional loans typically require a minimum credit score of 620.
What is considered a bad FICO score?
A FICO score below 580 or a VantageScore of less than 601 is considered a bad credit score.
FICO® score | APR | Monthly payment * |
---|---|---|
680-699 | 7.260% | $2,049 |
660-679 | 7.474% | $2,092 |
640-659 | 7.904% | $2,181 |
620-639 | 8.450% | $2,296 |
If you make $70K a year, you can likely afford a home between $290,000 and $310,000*. Depending on your personal finances, that's a monthly house payment between $2,000 and $2,500. Keep in mind that figure will include your monthly mortgage payment, taxes, and insurance.
A person who makes $50,000 a year might be able to afford a house worth anywhere from $180,000 to nearly $300,000. That's because your annual salary isn't the only variable that determines your home buying budget. You also have to consider your credit score, current debts, mortgage rates, and many other factors.
An individual earning $60,000 a year may buy a home worth ranging from $180,000 to over $300,000. That's because your wage isn't the only factor that affects your house purchase budget. Your credit score, existing debts, mortgage rates, and a variety of other considerations must all be taken into account.
References
- https://www.consumerfinance.gov/about-us/blog/loan-estimate-and-closing-disclosure-choose-right-home-loans/
- https://www.bankrate.com/real-estate/income-needed-for-200k-home/
- https://themortgagereports.com/70827/70k-per-year-salary-how-much-house-can-i-afford
- https://www.bankrate.com/real-estate/how-to-negotiate-closing-costs/
- https://www.consumerfinance.gov/ask-cfpb/what-should-i-do-if-i-do-not-get-a-closing-disclosure-three-days-before-my-mortgage-closing-en-1911/
- https://themortgagereports.com/22502/how-to-buy-a-home-50000-per-year-income
- https://www.credible.com/mortgage/loan-estimate-closing-disclosure
- https://homebuyer.com/learn/loan-estimate
- https://northsidelegal.com/can-closing-disclosure-change-after-signing/
- https://files.consumerfinance.gov/f/201308_cfpb_respa_narrative-exam-procedures.pdf
- https://files.consumerfinance.gov/f/documents/201708_cfpb_2017-TILA-RESPA-Rule-Detailed-Summary-of-Changes-and-Clarifications.pdf
- https://www.fidelitybank.com/resources/knowledge-center/calculator-how-much-will-i-save-by-increasing-my-mortgage-payment/
- https://www.rocketmortgage.com/learn/what-credit-score-is-needed-to-buy-a-house
- https://www.consumerfinance.gov/owning-a-home/compare/review-loan-estimates/
- https://www.bankrate.com/personal-finance/credit/bad-credit-score/
- https://www.investopedia.com/articles/pf/05/030905.asp
- https://stairsfinancial.com/blog/how-much-house-can-i-afford-on-40k-a-year
- https://www.consumerfinance.gov/ask-cfpb/what-is-a-loan-estimate-en-1995/
- https://www.bankrate.com/real-estate/trid-know-before-you-owe/
- https://title-junction.com/2023/02/09/what-is-a-business-day-for-real-estate-loan-disclosures/
- https://wallethub.com/answers/pl/how-much-can-i-borrow-with-a-720-credit-score-1000508-2140806892/
- https://www.debt.org/real-estate/mortgages/how-to-pay-30-year-mortgage-in-15-years/
- https://www.rwmloans.com/closing-costs/
- https://www.nafcu.org/compliance-blog/revised-closing-disclosures
- https://money.usnews.com/loans/mortgages/why-the-underwriter-denied-your-mortgage-loan
- https://home.docsdirect.com/SiteAssets/resources/Articles%20and%20Videos/Change%20of%20Circumstances%20and%20Revised%20Disclosures%20FAQs_20231004.PDF
- https://www.lendingtree.com/home/mortgage/loan-estimate/
- https://themortgagereports.com/18520/20-percent-downpayment-risk-mortgage-interest-rate
- https://www.myfico.com/credit-education/credit-scores/fico-score-versions
- https://www.nerdwallet.com/article/mortgages/whats-exact-credit-score-need-buy-home
- https://www.icemortgagetechnology.com/resources/faq/kbyo/le-intent-to-proceed
- https://michaelbluejay.com/house/howmuchhome.html
- https://www.nafcu.org/compliance-blog/when-send-revised-loan-estimate
- https://wallethub.com/answers/pl/loan-companies-that-use-equifax-only-2140694077/
- https://www.myfico.com/loan-center/home-mortgage-rate-comparison/
- https://themortgagereports.com/19487/how-long-does-it-take-to-close-a-mortgage-gina-pogol
- https://www.fool.com/the-ascent/mortgages/28-36-rule/
- https://bluewatermtg.com/faq/what-is-the-2-rule-and-is-it-useful/
- https://www.consumerfinance.gov/owning-a-home/compare/request-multiple-loan-estimates/
- https://www.investopedia.com/three-day-cancellation-rule-5225911
- https://www.cainmortgageteam.com/how-much-house-can-i-afford-with-a-60k-salary/
- https://www.icemortgagetechnology.com/resources/faq/kbyo/revised-cd-revision-redisclosure
- https://www.sofi.com/learn/content/i-make-36k-a-year-how-much-house-can-i-afford/
- https://www.consumerfinance.gov/ask-cfpb/i-received-a-revised-loan-estimate-from-my-lender-showing-a-higher-interest-rate-and-increased-closing-costs-what-does-this-mean-en-1991/
- https://www.bankrate.com/mortgages/closing-disclosure/
- https://www.myheartland.bank/blog/the-closing-disclosure-form-what-it-is-how-it-works
- https://www.rocketmortgage.com/learn/what-to-do-if-your-mortgage-loan-application-is-denied
- https://quizlet.com/514362783/nmls-4-flash-cards/
- https://www.sofi.com/learn/content/i-make-45k-a-year-how-much-house-can-i-afford/
- https://www.rocketmortgage.com/learn/what-credit-score-do-mortgage-lenders-use
- https://quizlet.com/364188473/chapter-9-quizzes-and-tests-flash-cards/
- https://www.fdic.gov/consumers/consumer/moneysmart/podcast/documents/borrowing-money-how-much-mortgage-can-i-afford.pdf
- https://www.chase.com/personal/credit-cards/education/credit-score/most-accurate-score
- https://www.redfin.com/blog/how-to-read-loan-estimate/
- https://www.rightbyyoumortgage.com/blog/why-some-loans-go-from-being-approved-to-being-denied/
- https://www.rocketmortgage.com/learn/buying-a-house-without-your-spouse
- https://home.docsdirect.com/Pages/News/Articles/Changes-After-the-Closing-Disclosure-Is-Issued.aspx
- https://ncua.gov/regulation-supervision/letters-credit-unions-other-guidance/consumer-financial-protection-bureau-issues-interpretive-rule-waiver-trid-and-tila
- https://personalfinanceblogs.com/is-36000-a-good-salary-for-a-single-person/
- https://www.rocketmortgage.com/learn/closing-costs
- https://www.cnbc.com/select/which-credit-score-used-when-applying-for-mortgage/
- https://www.bankrate.com/loans/personal-loans/how-long-does-it-take-to-get-a-personal-loan/
- https://www.businessinsider.com/personal-finance/average-mortgage-interest-rate
- https://www.americanexpress.com/en-us/credit-cards/credit-intel/fico-score-8/
- https://www.icemortgagetechnology.com/resources/faq/kbyo/revised-le-revision-redisclosure
- https://www.experian.com/blogs/ask-experian/what-credit-score-do-i-need-to-buy-a-house/
- https://www.consumerfinance.gov/ask-cfpb/can-my-final-mortgage-costs-increase-from-what-was-on-my-loan-estimate-en-172/
- https://finance.yahoo.com/news/much-house-afford-75k-salary-110039053.html
- https://www.apartmenttherapy.com/shouldnt-make-extra-mortgage-payments-36886679
- https://lo.primelending.com/pclick/calculators/paying-extra-towards-mortgage
- https://www.forbes.com/advisor/mortgages/mortgage-loan-estimate/
- https://blog.firstam.com/bid/66859/Top-5-things-to-know-about-GFE-fees-and-tolerance-levels
- https://www.capitalone.com/learn-grow/money-management/credit-score-needed-to-buy-a-house/
- https://www.quickenloans.com/learn/credit-score-to-buy-a-house
- https://www.bankrate.com/real-estate/what-credit-score-do-you-need-to-buy-a-house/
- https://capacity.com/ai-and-automation-in-mortgage/further-reading/when-is-a-revised-loan-estimate-required/
- https://www.usbank.com/home-loans/mortgage/first-time-home-buyers/mortgage-underwriting-process.html
- https://www.fool.com/the-ascent/mortgages/spouse-bad-credit/
- https://themortgagereports.com/66651/your-mortgage-credit-score-might-be-lower-than-you-think-it-is
- https://blog.alta.org/2015/11/how-to-comply-with-the-closing-disclosures-three-day-rule.html
- https://www.nationwide.com/lc/resources/home/articles/pay-off-mortgage-faster
- https://www.consumerfinance.gov/owning-a-home/close/look-out-revised-loan-estimates/
- https://www.rockethomes.com/blog/home-buying/how-often-does-an-underwriter-deny-a-loan
- https://files.consumerfinance.gov/f/documents/cfpb_kbyo_guide-to-loan-estimate-and-closing-disclosure-forms_v2.0.pdf
- https://www.cnbc.com/select/easy-tips-to-help-raise-your-credit-score/
- https://angeloakms.com/wp-content/uploads/TRID1.pdf
- https://quizlet.com/507124466/final-cumulative-set-flash-cards/
- https://www.wellsfargo.com/financial-education/homeownership/loan-amortization-extra-payments/
- https://www.quickenloans.com/learn/understanding-your-loan-estimate
- https://www.equifax.com/personal/education/credit/score/articles/-/learn/what-is-a-good-credit-score/
- https://www.consumerfinance.gov/ask-cfpb/what-information-do-i-have-to-provide-a-lender-in-order-to-receive-a-loan-estimate-en-1987/
- https://www.rocketmortgage.com/learn/how-long-from-underwriting-to-closing
- https://stellarfi.com/answer/what-credit-score-is-needed-to-buy-a-300k-house
- https://www.chegg.com/homework-help/questions-and-answers/borrower-waives-7-day-waiting-period-receiving-loan-estimate-closing-must-put-request-prep-q111281915
- https://www.forbes.com/advisor/mortgages/clear-to-close-timeline/
- https://www.creditkarma.com/credit-cards/i/fico-score-vs-credit-score
- https://www.investopedia.com/loan-estimate-5120625
- https://smartasset.com/mortgage/mistakes-to-avoid-when-paying-off-your-mortgage-early
- https://www.lendingtree.com/personal/tips-to-get-preapproved/
- https://mortgagesolutions.net/2024/01/03/home-loan-estimate-vs-closing-disclosure/
- https://www.capitalone.com/learn-grow/money-management/fico-score-vs-credit-score/
- https://www.areal.ai/blog/the-ultimate-guide-to-understanding-your-closing-disclosure
- https://rlselaw.com/wp-content/uploads/2017/03/Closing-Disclosure-Timeline.pdf
- https://www.bankersonline.com/qa/timing-revised-loan-estimate
- https://www.consumerfinance.gov/compliance/compliance-resources/mortgage-resources/tila-respa-integrated-disclosures/tila-respa-integrated-disclosure-faqs/
- https://www.wolterskluwer.com/en/expert-insights/a-refresher-on-triggering-events-impacting-the-revised-loan-estimate
- https://www.sofi.com/learn/content/tips-to-pay-off-mortgage-in-5-years/
- https://myhome.freddiemac.com/blog/homebuying/everything-you-need-to-know-about-loan-estimates