If you’re considering buying your first home in Colorado soon, you may be wondering if you can qualify for a mortgage … and you’re not alone. Recent research conducted by Fannie Mae turned up some common misunderstandings about today’s home financing requirements.
Many consumers thought that their credit score wasn’t high enough to qualify for a home loan. Others incorrectly assumed they needed a 20% down payment, or that their current debt levels were too high. We’d like to clear up these misconceptions about qualifying for financing with Home Mortgage Alliance.
- The minimum credit score required for a home loan may be lower than you think.
Half of those interviewed by Fannie Mae researchers said they were unsure of the minimum credit score needed to qualify for a loan.
- 14% thought the FICO score needed to be higher than 680.
- 32% thought it needed to be higher than 620.
The minimum credit score to qualify for a conventional home loan with Home Mortgage Appliance is 620, but we offer other home loans that require a lower minimum score to qualify. And while a higher score may help you secure a lower interest rate, it may be well-worth buying your first home now if property prices are rising in areas where you plan to shop for a home. Finding a starter home at an attractive price is another reason to buy now instead of later.
- Down payment requirements for loans start at just 3.5%. Some offer zero down options.
13% of consumers surveyed thought the minimum was 20% of the loan amount, while 1 in 5 thought the minimum was 6-10%. Here’s more good news: qualified applicants may apply for an FHA home loan with just 3.5% down, and USDA and VA home loans may accept zero down for qualified applicants.
- Your allowed monthly debt level may be higher than you think.
Researchers found that this question confused the most respondents. Most (61%) didn’t know how much debt they could be managing and still qualify for a home loan, while many others said the limit was 40%. However, you may qualify with up to 50% of your monthly income used to pay current debts.
While most homebuyers go online for answers to their home financing questions, less than half contact a local lender for home financing information. There’s no substitute for assistance from a local Colorado licensed originator, so why not contact Home Mortgage Alliance today
Home Mortgage Alliance is dedicated to helping you achieve your financial goals through personalized service and a streamlined, digital mortgage experience.
* Stearns Lending, LLC is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government.
* Mortgage insurance may be required on loans greater than 80% loan to value and will increase your monthly payment.
Aug 01, 2019