Buying a house for the first time can be a daunting task, especially when it comes to understanding credit scores. Many first-time homebuyers worry that their credit ratings are too low to buy a home, but the truth is that there are several loan options available for those with lower credit scores. Conventional mortgages typically require a credit score of around 680, while FHA mortgages, VA loans, and USDA loans all have more relaxed requirements. Jumbo loans are also available for those with higher credit scores.
No matter what type of loan you're looking for, it's important to understand how pre-approval affects your credit score and how to improve it if necessary. It's also important to know that your credit score isn't the only factor in mortgage approval - lenders will also consider factors such as income and down payment amount. FHA loans are backed by the Federal Housing Administration and require a minimum credit score of 580 with a 3.5% down payment. VA loans are backed by the Department of Veterans Affairs and don't require a down payment, while USDA loans require a minimum credit score of 620 and don't require a down payment either.
Jumbo loans are available for those with higher credit scores and larger down payments. It's important to note that there are several myths about credit scores that can lead to higher interest rates or even loan denial. For example, some people believe that having no debt is better than having some debt, but this isn't true - having some debt can actually help your credit score. Additionally, some people believe that personal loans can hurt your credit score, but this isn't true either - personal loans can actually help your credit score if you make payments on time.
If you're looking to buy a house for the first time, it's important to understand the different loan options available and how they affect your credit score. Make sure you check your credit report before applying for a loan and take steps to improve your score if necessary. Additionally, make sure you compare lenders on Credible to get the best deal possible.