Yes, much easier. But there is some background on that and there are other choices you’ll need to make. This means speaking with a loan officer and finding out which loan programs will work in your situation. FICO scores are the score of choice for mortgage companies when evaluating a loan application. The credit score is a three digit number ranging from 300 to 850. Anything above 740 is considered “excellent” credit while anything below 620 is considered “poor.”
Just a few short years ago when lenders required higher credit scores in order to qualify, when someone had a credit score of say 680, they found it was difficult to qualify for a home loan. As lenders began to return to traditional underwriting credit requirements, guidelines turned from “strict” to “easier.” The credit score not only helps someone qualify but can also determine the minimum amount of down payment needed in order to qualify for a mortgage.
Government-backed loans, those underwritten to FHA, VA and USDA standards, allow for credit scores as low as 620, with some programs as low as 600. For those with a low credit score in addition to needing a loan with as little out of pocket expense as possible, one of these three programs might make sense. VA loans are reserved for veterans and those who have served while the USDA program has specific household income and geographic limits. The FHA loan does not have any limits regarding income or location but do require a down payment of at least 3.5% of the sales price. VA and USDA loans don’t have a down payment requirement.
Conventional loans have also returned to a more “normal” credit evaluation process. Most borrowers with credit scores as low as 620 can qualify for a mortgage and even as low as 600 if the lender identifies certain compensating factors that justify the lower score.
The most important thing you can do is to speak with a loan officer and have a new credit report pulled to see exactly where you stand. It’s very likely your current score is just fine where it is but if it’s not your loan officer can help you get back on track and get your scores where they need to be.
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