credit score needed to buy a house

credit score needed to buy a house

• FHA loan buy a house minimum credit score is 500
  
• VA loan buy a house minimum credit score is 500
  
• USDA loan buy a house minimum credit score is 580
  
• Jumbo loan buy a house minimum credit score is 660
• Fannie Mae loan buy a house minimum credit score is 620
  
• Freddie Mac loan buy a house minimum credit score is 620
  

how much house can I afford

Debt to income ratios are the calculations underwriters use to determine whether a borrower can qualify for a mortgage. They are used to determine if you have the capacity to repay your mortgage.

• FHA DTI ratio is 45%/55% with credit score above 620
• FHA DTI ratio is 31%/43% with credit score below 620
• VA maximum debt to income ratio is 45%/55%
• USDA maximum debt to income ratio is 36%/50%

There are two calculations. The first or Front Ratio is your housing expense-to-income ratio. This is your proposed mortgage payment (principle, interest, taxes, mortgage insurance, and home owners insurance) divided by your gross monthly income.

The second or Back Ratio is your total monthly obligations-to-income ratio. This is your gross monthly payment including Mortgage PITI divided by your gross monthly income.

collections

FHA does not require collection accounts to be paid off as a condition of mortgage approval. However, FHA does recognize that collection efforts by the creditor for unpaid collections could affect the borrower’s ability to repay the mortgage.

• If evidence of a payment arrangement is not available, the lender must calculate the monthly payment using 5% of the outstanding balance of each collection, and include the monthly payment in the borrower’s debt-to-income ratio.

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Credit score needed to buy a house.