What credit score do you need to buy a house?

Many persons who wish to buy a home invariably ask the question, ‘what credit score do you need to buy a house?’ However, the answer is not an easy one. If you wish to become eligible to get a loan to buy a house, that does not depend on your credit score alone. Three other factors would also be considered by the lender. The lender would definitely look at your credit score. If it is above 720, the lender would not ask too many questions. On the other hand, if your credit score is less than 720, even then you would definitely be able to get a loan to buy your dream home, but the terms would change.

Normally, the lender takes into consideration your debt to income ratio, your liquid assets, and your down payment amount, apart from your credit score. At present, if you possess a credit score of 720, offer a down payment of 20%, and prove that you have cash in your bank that could meet at least 6 monthly payments, then you would be sanctioned your loan immediately. These monthly payment amounts would include not only the monthly mortgage payment, but also the property tax for each month, insurance payments, and other association fees.

However, majority of lenders allow people with credit score of 620 or above also to obtain home loans. However, the down payment required from you might go up and the interest rate on the loan would also be higher. The lender would also take a deep look at your credit history. If you had paid your dues properly and your debt to income ratio is low, your chances of getting a loan would be quite bright. If your credit score is below 620, then you would be better off approaching lenders who are prepared to offer home loans to people with bad credit scores. That might be a bit difficult after the economic meltdown that had started in the middle of 2008.

Source by Devin Dozier

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