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Less Than Perfect Credit? Let's Talk About It!

October 8, 2019

According to reports, the average national credit score has reached an all time high of 706, but that does not mean you cannot buy a new home if your credit score is lower than the average.

The National Association of Realtors Q3 2019 Home Survey says that 63% of Americans believe now is a great time to buy a new home.  However, for many potential home buyers, fear and misunderstanding of mortgage lending practices can stop them from shopping for a home.  

Many home buyers believe that they are required to have at least a 20 percent down payment.  This causes home buyers to prolong the home buying process while they save the money to buy their home.  Actually, 32% of current US homeowners put 5% or less down on their home, according to census data, reports the 2019 Home Buyer Report.

Experian, the leader in consumer credit reporting, gives this breakdown of the most popular types of loans and requirements:

FHA Loan:  Ideal for those with less than perfect credit, FHA requirements focus on the state of your credit score.  If your score is between 500 and 579, a 10% down payment is typically required.  If you credit score is 580 or higher, you can put as little as 3.5% down.

Conventional Loan:  It is possible to get approved for a Conventional Loan with a credit score as low as 620, but some lenders may require a score of 660 or higher.

USDA Loan:  While the USDA doesn’t have a set credit score requirement, many lenders require a score of at least 640.  Generally, there is no down payment required on USDA loans and they are only offered in certain locations.

VA Loan:  As with income levels, lenders set their own minimum credit requirements for VA borrowers.Lenders will check credit scores as part of an overall screening for VA loans.  

There are plenty of loans and programs that allow people with less than average credit scores to purchase a new home.  Grant & Co. works with the best mortgage lenders in the Mid-South.  If you think you cannot buy a home because of your credit score or if you need help in raising your score, contact a Grant sales representative and we get you on the right path toward homeownership.