The real estate market remains hot right now, despite economic headwinds. Many people want to jump in and buy a home or upgrade their current home to a new one for good reason. Interest rates are incredibly low, so now could still be a buying opportunity, despite limited inventory and high prices in some locations.
If your credit isn’t perfect, you may wonder if anyone will approve you for a mortgage. The short answer is maybe.
You aren’t alone if you don’t have great credit. Around 15% of Americans have a credit score from 500 to 599, which is considered poor. Around 10% of people have credit in the range of 600 to 649, which is considered fair.
When you’re applying for a mortgage, you’re most likely to be approved with a score of at least 650, although even anywhere in the 600s can make it challenging. If your score is below 500, you’re almost certainly not going to be approved for a mortgage, and beyond that, the following are key things to know.
Conventional mortgages tend to have the strictest requirements as far as your credit score. Freddie Mac and Fannie Mae are two companies offering conventional mortgages. Freddie Mac’s minimum credit score requirement is 660, with a down payment of 3%. Fannie Mae’s minimum score for a 3% down payment is 620. If you make a down payment of at least 25%, you may be eligible for a Freddie Mac conventional mortgage with a credit score as low as 620.