Thinking about applying for a mortgage loan to buy a house with good credit? First, it’s a good idea to check your credit reports and know your credit score to determine if a lender will consider your credit good enough for a loan.

πŸ€” Why do I need to know my credit score?

Your ability to obtain a mortgage and a good interest rate is determined by your credit score. Although one may get a mortgage with a bad credit score, lenders often consider a good score of 670 or higher. The most attractive scores to lenders are the exceptional credit scores above 800.

οΈπŸ“„ Why do mortgage lenders consider credit scores?

A lender’s ability to pay off their debt is determined by credit scores. A high credit score is an indication that the prospective buyer is financially disciplined and reliable. It also indicates that such a person is capable of paying back the loan.

Mortgage lenders want to make money and minimize losses. A low credit score is an indication that you are a risky borrower.

🌟 Can you buy a house with good credit?

You need to review the FICO credit score scale and gauge where you stand. This credit score scale ranges from exceptional to poor. If you see that your score isn’t as good as you thought it was, endeavor to improve your credit before starting the home buying process.

  • Exceptional: 800 and above
  • Very Good: 740 – 749
  • Good: 670 – 739
  • Fair: 580 – 669
  • Poor: 579 and below
If you do manage to get a mortgage loan with a lower credit score, you’ll end up paying higher interest costs. A good example is an FHA Loan that approves lower credit scores but assigns higher interest rates.

Besides credit score, other factors being considered by lenders prior to mortgage loan approval are your current income, your debt-to-loan ratio, and your debt-to-income ratio. Your credit may be great, but if you don’t meet the other requirements, you risk being denied.

πŸ“± Contact RL Real Estate Group

We can help!
Buying or selling a home in Sioux Falls? We’ll be with you from the start through the closing and beyond! ☎️ Call us at 605-212-8431. πŸ“± You can also text us!

πŸ•΅οΈ Credit Score Break Down

Exceptional credit is a score of 800 or above. If this is you, the chance of getting a mortgage loan with a decent interest rate is almost guaranteed. Watch that debt-to-income ratio, however, because that could halt the entire process.

A very good credit score is between 740 and 749. Your chances of getting a loan are pretty good with this score, and the interest rate should be fair, too.
how to buy a house with good credit concept - couple smiling and looking for houses online

A good credit score is between 670 and 739. You’re still within the acceptable range to secure a mortgage loan. If your debt-to-income ratio is low, your chance of getting a lower interest rate improves.

A fair credit score is between 580 – 669. You’ll find it difficult to get a traditional mortgage loan with this score, but you may qualify for alternative lending programs or need a higher down payment.

A poor credit score is 579 and below. You may still qualify for a loan from a subprime lender, but you can expect to pay extraordinary interest rates and have a large down payment. In most cases, getting a loan is difficult with this score.

buy a house with good credit concept - unhappy couple holding a credit card and looking at a laptop

πŸ’΅ How to Buy a House with Good Credit

A good credit score will have a long term positive impact on your finances and ensure that you enjoy the benefits associated with homeownership in years to come.

Want more information on buying a house with good credit? Contact RL Real Estate Group at 605-212-8431 today! We’ll guide you through the process and handle all the paperwork.
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How to Buy a House with Good Credit
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How to Buy a House with Good Credit
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If you are wondering how to buy a house with good credit, we have the answer! Find out what lenders consider a good credit score and why.
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RL Real Estate Group
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