Credit score for mortgages

Quote from jmcunnin : Is there a certain credit score that lenders look for when deciding on approving a mortgage? I am looking to buy soon, and have a score of 766. I know they factor in a lot of other things, but is that score high enough?

Score is part of it but got you have income too. A nice down payment will most likely will be required. I believe first time home buyer programs allow 10% down payment. Commercial properties won't even talk to you without at least 20%. Scores is only one side of the equation. Your score just helps with what rate you are going to get as well as showing you won't default. 766 is fine but again, it is only 1 part of many other parts.

Pre 2008, they were literally beating people with hundred dollar bills to take loans Self reported income statements? You kidding me?!?!

I appreciate the response.. Just wondering though..I can have the 10%, but I thought FHA was like 3% down payment?

Quote from jmcunnin : I appreciate the response.. Just wondering though..I can have the 10%, but I thought FHA was like 3% down payment?

Currently it is as low as 3.5%

http://www.hud.gov/buying/loans.cfm

Thanks for the link!

766 is a very good score to have when dealing with housing loans. I think if you drop below 650 or something that is when you get into trouble.

I bought a house with around a 760, i had no debt of any kind (including car payment). After i explained the 3 hard pulls on my credit (damn slick deals and the credit card sign up reward bonuses), i was approved without a problem lol.

So i would say as long as on paper you make enough to afford the house (as well as your current outstanding debts if you have any), you have the down payment, and enough money to cover whatever else (escrow account for first year property taxes, home owners insurance etc) you should be good.

3 general things they will look for:

credit score - how trustworthy are you with credit?
credit report - do you have a lot of outstanding credit (e.g. credit available on CC's?)?
debt/income ratio - my lenders were looking at 45% as a MAX (and debt includes monthly payments for everything, including student loans if they are in deferment, and credit cards even if you don't carry a balance)
general fiscal health which includes availability of a down payment

Your credit score and history will largely determine how much they are willing to give you and at what rate. Availability of a down payment will influence how much they are willing to loan, and if you pay PMI or not. Our mortgage "person" (not sure what to call him) said that dp amount didn't matter for rates.

Also.... my wife and I had 800+ scores (they take the 6 scores (3 for each of us) and do some culling to get an "average" score.... not sure of the math), so things may matter more/less if your credit isn't as stellar.

Quote from Dr. J : 3 general things they will look for: credit score - how trustworthy are you with credit? credit report - do you have a lot of outstanding credit (e.g. credit available on CC's?)? debt/income ratio - my lenders were looking at 45% as a MAX (and debt includes monthly payments for everything, including student loans if they are in deferment, and credit cards even if you don't carry a balance) general fiscal health which includes availability of a down payment Your credit score and history will largely determine how much they are willing to give you and at what rate. Availability of a down payment will influence how much they are willing to loan, and if you pay PMI or not. Our mortgage "person" (not sure what to call him) said that dp amount didn't matter for rates. Also.... my wife and I had 800+ scores (they take the 6 scores (3 for each of us) and do some culling to get an "average" score.... not sure of the math), so things may matter more/less if your credit isn't as stellar.

Does that 45% max ratio include what the mortgage note would be? Or is that max 45% of all debts before the mortgage? When calculating that ratio, what all do I need to include? You wouldn't need to include things like car insurance would you?

Quote from jmcunnin : Does that 45% max ratio include what the mortgage note would be? Or is that max 45% of all debts before the mortgage? When calculating that ratio, what all do I need to include? You wouldn't need to include things like car insurance would you?

that 45% was a total figure including the prospective mortgage.

I don't think insurance was included.

What surprised me, however, is that student loans in deferment (e.g. no payments due) were included - they use some calculation to figure out a "payment". Also CC's were included. I never carry a balance, and a credit report is just a snapshot in time, so the balances reported may catch you at a low or high month of credit utilization (e.g. say you go on vacation and the bill is $5k.... and it just so happens to show when they pull your report).

As for us, we were trying to keep our condo (rent it) and buy a new place and with some sample numbers we were JUST under the 45%.

The 45% number may vary according to lender, but due to all the special considerations it was difficult to come up with a number by myself. They may even use the 45% as a benchmark for how much they will lend you - e.g. calculate current d/i, figure out how much more debt you can carry before you hit the 45% threshold, then back-calculate what size mortgage such a payment would come from.

It's been awhile, buy Navy Fed's a pretty legit CU, they were nice enough to show me their basic calculation in regards to credit score, but that was over a year ago, so accuracy and your bank may vary. Let's say the top rate they advertised was 5%. That's only going to those with 760+ I believe. The others would get 1/8% added for every I think it was 25 points below that ceiling. Remember that the credit score you got might not be from the group your bank uses.

You should be fine to get that top score, but you have to consider the other variables of getting approved like others said. You should always try for 20%, but don't get in a rush to buy a home. There's no LIMITED TIME ONLY or ZOMG THIS IS MY DREEM HOMEs out there, they're not going to suddenly hoard these things. I'd buy when I have at minimum a 20% down payment and $5000 cash reserve to handle anything that isn't perfect/safe you didn't notice.

AND ALWAYS GET A GOOD HOME INSPECTION PRIOR TO SIGNING!!

Quote from wes : AND ALWAYS GET A GOOD HOME INSPECTION PRIOR TO SIGNING!!

Cannot be stressed enough.

AND, shop around.