What credit score do I need to buy a house in 2009?
26 February 2009 No Comment
Q: What credit score you need to buy a house in 2009?
A: It is no longerВ simply a matter of scores.В Qualifying to buy a house has gone through some changes, and now depends largely upon on three factors:
- down payment size
- debt to income ratio
- liquid assets
Higher credit scores are of course better. The best mortgage terms to buy a house right now, will be for someone with 720 middle credit score, 20 percent down payment and enough cash in a bank for 6 monthly payments that would include mortgage, monthly property tax, association fees if any and homeowners insurance.
The cut off credit score for a non FHA loan is possibly around 620 today. I don’t even know exactly. Even in such a case, you may still find a lender willing to make you a mortgage, if you put large down payment and have low debt to income ratio. How large and/or how low no one
knows. The problem is that some banks and credit unions don’t loan these days, even if everything looks only good. The want every aspect to be perfect, no less. The property may be located in area where home values are still declining rapidly, or depth of your credit history is not good enough for a given lender, even if credit scores are just fine. So it is quite convoluted. I would say that with credit scores of 653, 676 and 697, you have a good chance to get a loan on decent, not the best terms, if you put 20% down payment and other two factors are agreeable with lenders.
FHA loans have different lending criteria and you can get a mortgage with as little as 3 percent down. Credit scores were not of importance for FHA, but it might have changed. The loan amounts are limited, see what they are in the county you are looking. This is what you need to know, besides credit scores to buy a house in 2009. My advise is to try getting a full loan preapproval from a bank or two.