You may be surprised to hear that your credit score impacts your home loan options. But it’s true! Your credit score affects how much you pay in interest, the type of loan you get, and even how big a house you can buy. So if you want to know how much home you can afford based on your credit score, continue reading this blog post to discover how your credit score can affect your mortgage options.
What Is A Good Credit Score?
A good credit score is generally above 700, while a perfect one is above 750. An excellent credit score is anything over 800. But every lender has their definition of what makes a beautiful, exemplary, or even average credit score. In some cases, how much money you make plays a role in determining if your FICO score is good enough to get them to loan you money for that house.
So how do you know if your mortgage company considers your FICO score excellent or outstanding? The best way to find out is by asking them upfront.
Get Into The 700 Club (Or Higher)
To get approved for a home loan, you’ll need good credit. And that means your credit score needs to be at least 620. Don’t give up hope if you have some bumps in your history and can’t break through that 600 number yet. The higher your credit score, the better financing terms you’ll qualify for. An 850+ credit score allows you for lenders offering mortgages with rates as low as 3.75%!
Getting into or staying in one of these clubs is all about paying down debt and building good credit habits, such as making payments on time (and being paid off) and only charging what you can afford to pay back each month.
Closing Costs Shouldn’t Break The Bank.
If you’re interested in buying or refinancing a home, one of your biggest obstacles will likely be your credit score. If you have good credit (720 or above), it’s possible to get 0% financing—or close to it—for five years. With fair credit (660-720), you may have to put down more money and pay more in interest.
However, if your score is under 600, getting any loan can be challenging. And if it’s below 500, lenders won’t even consider you. As a result, many first-time buyers focus on improving their scores before even starting house hunting.
How Much Home Loan Can I Get With 650 Credit Score
650 Credit Score means that your credit is average. The limits available on home loans are between $200,000 to $1,150,000. If you want to get a mortgage loan with a 650 credit score, you have a higher chance of getting a loan.
You can buy the property or build a house on your land by taking bank money or taking help from family members or friends. It depends upon how much money you want to take and what type of property you want.
After calculating whether it will be suitable for future investments, you can decide for yourself. I hope that you are able to find the best mortgage for your home and that you have a successful home ownership.