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Credit Score question

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I am wanting to try and get a pre-approval letter for a mortgage of 300k. What kind of credit is needed for that amount?? I know Debt to ratio and yearly income has a big part of it but on a credit stand point what is the lowest it will take to qualify?

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Each lender has their own specific criteria, but in general, approval isn't based on amount of loan vs. score. Either your score is good enough or it isn't, be it $100k, $300k or $500k. While FHA guidelines set the lower limit of approval at 580 (I believe), most lenders set the cut-off at 640 FICO. Having said that, your interest rate (and subsequent monthly payment) can vary significantly based on your score.

Bottom line, ask your lender to pull your credit to see where you stand. He/she can tell you if you even qualify, what your rate will be and, where applicable, how much you need to raise your score to get a better rate. 

Edit: one more thing. Only MyFICO can give you your actual "mortgage" score. Sites like Credit Karma are only a ballpark, and can be as much as 50 points off.

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17 hours ago, SimplyJay29 said:

a credit score of 680 would help you achieve your goal.

As i explained, some lenders will go as low as 580. It all depends on what a borrower can afford to pay monthly.

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On 6/21/2019 at 7:10 AM, Harry Seaward said:

As i explained, some lenders will go as low as 580. It all depends on what a borrower can afford to pay monthly.

Also, a good rule of thumb with a mortgage is to actually run the numbers yourself and know what you can afford.  What YOU can comfortably afford may not be in line with what the bank says you can afford.  It would be a bad situation if you bought a house with a mortgage of (as example) 2K monthly just because the bank approved you for it, though you could only reasonably afford a mortgage of 1500 monthly.

I speak from experience on this one.

When my wife and I took out our mortgage, the bank approved us for more than we wanted.  We did our budget and figured our monthly payment out, and from there, reversed it to find out the max loan we could afford. 

And of course, the higher your FICO the better your terms.  The better your terms, the lower the interest rate = the lower your monthly payment.

 

Quote

Bottom line, ask your lender to pull your credit to see where you stand. He/she can tell you if you even qualify, what your rate will be and, where applicable, how much you need to raise your score to get a better rate. 

This is excellent advise.

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35 minutes ago, Amerikaner83 said:

Also, a good rule of thumb with a mortgage is to actually run the numbers yourself and know what you can afford.  What YOU can comfortably afford may not be in line with what the bank says you can afford.  It would be a bad situation if you bought a house with a mortgage of (as example) 2K monthly just because the bank approved you for it, though you could only reasonably afford a mortgage of 1500 monthly.

Also excellent advice. We had a lender that fully understood our situation, having come from losing a place to foreclosure, etc. He came to us pre-approved for some insanely high amount, which would have put us right back behind the eight ball. (They don't take into consideration that some folks will spend $40.00 for lunch for two at a hot dog joint on a regular basis.)

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