This is a great question and one that almost every first-time buyer asks when they are gearing up to buy a home. However, the reality is this question has more than one answer and depends heavily on the type of loan you qualify for.
Without making things too complicated, let’s pretend you have a conventional loan that’s backed by Fannie Mae and Freddie Mac (federal mortgage enterprises). In this case, the minimum score you will need is 620. Note that most lenders require a score between 620 and 640. However, it is possible to buy a home with a score of 580 if you have what’s called an FHA (Federal Housing Administration) loan.
According to a report by TransUnion, Millennials are the generation with the lowest credit score (625) compared to Generation X (650) and baby boomers leading the way (709). This means 43% of millennials don’t have good enough credit to land a mortgage and get approved for a home loan.
The good news, not all is lost. The world’s leading provider of credit ratings, S&P Global Ratings, recently predicted that in 2018 non-qualified mortgage (QM) loans will double and triple. This means that credit-challenged millennials will have access to loans that don’t need agency requirements.
My best advice to you when seeking out answers to questions regarding your credit score? Consult with a realtor. We are trained to guide you through the qualifications and requirements needed to purchase and sell a home and have an arsenal of knowledge on this topic and more.
Contact me today and we can discuss everything from the loans you qualify for to the strength of your credit.