Credit score Q&A: “What credit score do I need to get a mortgage?”

If you’re like most homeowners out there, you’re probably wondering if you can take advantage of the record low mortgage rates currently on offer – the same goes for aspiring homeowners.

Unfortunately, the super low interest rates have been met with tighter underwriting guidelines, as banks and mortgage lenders have had to make some adjustments in the risk department.

Credit scoring requirements have risen as a result, sending more mortgages to only the most creditworthy borrowers.

But you can still get a mortgage without pristine credit. Heck, the FHA doesn’t even have a minimum credit score requirement, though individual banks that offer FHA loans typically have a credit scoring floor.

Generally speaking, a credit score south of 620 is considered subprime (credit score range), meaning it’ll be difficult to obtain financing, but if you are able to, you’ll be paying a premium.

You may also have to come in with a larger down payment, or reduce your desired loan amount to get approved. Certain transactions like cash out refinances may also be limited.

A credit score between 620-680 is considered Alt-A, meaning your credit is less than satisfactory, but still good enough to secure financing, assuming other things are in place, like a steady job and healthy assets.

Credit scores between 680-720 are generally good enough to qualify for most loans and may even come with a rebate, meaning a lower interest rate for you.

If your credit score is above 740, you’ll likely qualify for all types of mortgages, from conforming to jumbo loan amounts, high loan-to-value loans, and so on.

I’ve even seen special rebates for borrowers with credit scores above 800, so never underestimate the importance of your credit score, even if you think it’s already as high as it can be.

All that said, remember that a credit score is just one factor in the mortgage approval process. Without a steady job or verifiable assets, you may be out of luck even with an excellent credit score.

There’s also no universal credit score that a mortgage lender will ask for – it will vary from bank to bank, so keep that in mind while shopping for a home loan.

Tip: It is recommended that you check your credit score well before applying for a mortgage to avoid any last minute surprises.

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