Hi there. It’s Kirk Brewer, the Loan Geek, here with this week’s Loan Geek Mortgage Tip of the Week. This week, I would like to talk to you guys about credit. There’s a lot of misinformation out in the marketplace regarding what type of credit or how good your credit needs to be to qualify for a home loan.
The myth out there is that you have to have perfect credit in order to qualify for a home loan and that’s simply not true. Most standard loan programs, whether it’s conventional loan or an FHA loan, allow for some derogatory credit or depression in your credit scores.
The FHA loan in particular is much more lenient regarding negative credit. Ideally, we would like to see your credit scores no lower than the low 600s. Especially on an FHA loan, where would like to see a 620 or better.
On a case-by-case basis, we might be able to get something done below a 620. But again, that’s on a case-by-case basis and based on the type of credit item that may be bringing your scores down below that level.
So one of the things that’s very important and plays into all of this is what kind of derogatory credit is bringing your scores down. Is it a couple of late payments? Was there a collection or a charge-off, maybe medical payments or did you have a foreclosure or a bankruptcy? All of these different types of derogatory credit have their own rules, have their own season requirements and have different effects on how they bring your credit scores down, not to mention how new, fresh or old they may be as far as when they first went on your account as a derogatory account.
So if you are interested in buying a home and you believe that your credit may be less than ideal, it’s very important that you are working with an experienced mortgage professional, someone who has experience with credit challenges and knows how best to advise you to navigate through that process.
So if you have any more questions on this topic or any other mortgage-related topic, you can go to our website at www.LoanGeeks.com. That’s L-O-A-N-G-E-E-K-S dot com. You can also reach out to me or a member of my team directly and we would be happy to help you and walk you through the process.
We are the Loan Geeks, your full service, low-rate mortgage experts. Thanks and stay tuned for next more Loan Geek Mortgage Tips of the Week. Talk to you soon.
Kirk Brewer
Branch Manager | Loan Geek | NMLS #150287