Good Question. If you’re going with Conventional Financing, the Minimum FICO Score is 620 AND… the higher the FICO Score, the better the terms, including a better interest rate. The Best FICO Score is 850. If you have a 760 or above, you will get the best rates and best options. As the FICO Score goes down, the higher the interest rate and the fewer the options. Not always, but most of the time, you would need at least a 620 FICO to qualify for conventional financing.
For FHA financing, the minimum FICO Score is 580 but if your FICO is between 500 to 579, you may still qualify for FHA financing, though you will likely need a larger down payment. For VA loans, the Department of Veteran Affairs does not set a specific minimum, but most lenders require a FICO of 620 or higher. Again, the higher the FICO, the lower the interest rate.
AND Ron, how does the FICO Score affect the seller? The number one reason a buyer’s FICO could affect the seller is… The higher the FICO, the stronger the buyer… ie. For example: A home seller gets 2 offers on their home that are both getting Conventional Financing. One has a FICO of 620 and one has a FICO of 800. Everything else being equal, the seller would most likely take the offer with the higher FICO score…mainly because fewer things can go wrong with underwriting AND, if the buyer with the 620 FICO purchases something on credit during the escrow period, it may be enough of a ‘hit’ to their credit score that they may not even be able to qualify for the financing they were originally approved for. Conversely, if the buyer with the 800 FICO purchased something on credit during the escrow period they would probably still qualify (maybe not the same rate, depending on the size of the purchase). (Every candidate is different, and some candidates may have compensating factors like other assets that could affect their interest rate). Feel free to call and I’ll be glad to help you
Fun Facts for June: June 11th we’ll have a full moon. June 15th is Father’s Day. June 20th is the Summer Solstice. Both Roses and Honeysuckle are associated with June.
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