What FICO Score Is Needed to Get a Mortgage?
A FICO score is a credit score calculated using an algorithm that was created by the Fair Isaac Corporation to determine the creditworthiness of potential borrowers. However, when getting a mortgage there are a number of factors that are considered in addition to the score.
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Minimum Scores
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According to Bankrate.com, a score between 500 and 520 is the minimum you will need to be considered for a mortgage. However, even if you get a mortgage with this score, you will pay a significantly higher mortgage rate.
Preferred Rates
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The preferential rates will be given to individuals with credit scores of 760 or higher. Compared to the credit score of 500, the interest rate offered could be over 3.5 percent less.
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Down Payment
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The higher your down payment, the more likely a lender is to overlook a lower credit score.
Front-End Ratio
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The front-end ratio compares your monthly income to the amount of your monthly payment. Most lenders require that your monthly mortgage payment take up no more than 26 to 29 percent of your monthly income.
Back-End Ratio
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The back-end ratio compares all of your debt payments, including the mortgage payments, to your monthly income. Most lenders require your total debt payments to be less than 33 to 41 percent of your total income.
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