A few years ago, getting approved for a mortgage was easy. Credit ratings, income verification and debt to income ratios seemed like they never existed. These are a few of the reasons that getting a home mortgage is harder than it has been. A common question today from potential buyers is “What is the minimum credit score needed for a mortgage?”

Well, typically speaking, a potential home buyer should have a credit score of 650 or more to avoid facing hard times getting approved from banks or mortgage lenders. A credit score tat low typically means that if you are approved, your interest rates, terms or conditions will not be ideal. Although it is possible to still obtain a mortgage with a low credit rating, it is not generally recommended.

However, every little bit you can do to improve your credit situation prior to applying for a home mortgage loan will help, a lot. Improving your credit score will allow you more options as well as the chance to obtain much lower home loan interest rates. Even 1% of interest savings can easily add up to thousands of dollars over the course of a 30 year mortgage. Try to pay off any debts you can in full. Start with smaller debts then chip away at the higher interest debts you may have. If you owe people small amounts of money, but they have already reported you to the credit reporting companies, paying these debts off and having those credit reports updated to paid in full, it will dramatically increase the money you will save when getting a home mortgage. A lot of people can actually pay off their debts in full, especially their credit card debts, but choose instead to make the smallest payments they can and keep a few extra dollars in their pockets. Change this bad habit now and improve your financial situation and pay those debts down or off entirely.

Also, while making minimum payments is acceptable, it shows no commitment or effort to pay your debts. This plays a role when a mortgage lender or bank is evaluating your financial situation. If the bank sees that even though you have a lot of debt, that you pay as much as you can, which is typically more than the minimum payment, you will be considered less of a credit risk.

Getting a home mortgage can be hard with a credit score of 650 or less, but not impossible. It will no doubt be more difficult to obtain a mortgage, let alone one with favorable terms, rates, or conditions, but with a little research and legwork it can be found. Apply to a few different mortgage providers and see which one offers the best deal. Good luck getting your home mortgage, do not give up.

-M Petrone

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