What credit score do you need to qualify for a conventional loan? Review the list below to find out what type of conventional loan you can expect to qualify for:
While some people may qualify for conventional loans with credit scores as low as 580 or even lower for non-conforming conventional loans, borrowers with low credit scores who cannot afford to make large down payments should consider alternatives to conventional loans.
With a credit score of 620, borrowers will qualify for 95 percent financing, reducing the minimum down payment dramatically and making conventional loans a viable option. However, the majority of lenders require a credit score of 640 for borrowers to qualify for conventional loans.
Upwards of 680, borrowers will not be able to further reduce down payment requirements; however, borrowers may qualify for more beneficial interest rates.
Multiple bankruptcy filings – After filing for bankruptcy two or more times within a seven year period, borrowers must wait five years before regaining eligibility. With extenuating circumstances, the waiting period is reduced to three years from the latest discharge or dismissal date.
Borrowers who have undergone a foreclosure must wait seven years before applying for a new conventional loan, however, if extenuating circumstances are presented, this may be reduced to three years. Freddie Mac provides additional help and information to borrowers struggling with obtaining a mortgage after foreclosure here.
Following a short sale, borrowers must wait four years to borrow up to 80 percent LTV, four years for 90 percent LTV, and seven years for total eligibility. With extenuating circumstances, borrowers may reduce their waiting period to three years and borrow up to 90 percent LTV for the loan.
Choosing the right loan program and lender can take some time. Smart home buyers set aside enough time to compare lenders and rates in order to be sure that a loan program is the best choice for their unique circumstances. Even small differences between interest rates could save or cost hundreds if not thousands of dollars over the life of the loan. Patience and persistence can are important assets when looking for a loan.
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