If you’re currently considering buying your first home, you may be wondering if you’ll qualify for a mortgage - and you’re not alone. Recent research conducted by Fannie Mae found that many potential homeowners hesitated to apply for a mortgage because they had concerns that their credit score was not high enough to qualify for a home loan, they incorrectly assumed they needed a 20% downpayment, or their debt level was too high.
Here are the correct answers to three misconceptions about qualifying for a mortgage with Stearns Home Loans:
1. The minimum credit score required to qualify for a mortgage is lower than many buyers assume.
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 apply for a conventional home loan with Stearns Lending is 620, but you may qualify for other home loan programs we offer with a lower FICO score.
While a higher score may help you secure a loan with a lower interest rate, it may be well-worth buying your first home now if property prices are rising in your city, or if you find a home at an attractive price.
2. Many consumers overestimated the minimum down payment requirement to qualify for a home loan.
Of the survey respondents, 13% thought the minimum was 20% of the loan amount, while 1 in 5 thought the minimum was 6-10%. Here’s more good news: loans insured by the Federal Housing Administration (FHA) may require just 3.5% down. Other programs insured by the U.S. Department of Agriculture (USDA) as well as the U.S. Department of Veterans Affairs (VA) offer zero down payment options.
3. Your allowable debt level may be higher than you thought.
Most consumers (61%) didn’t know how much debt was allowed, while most 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 consumers do their initial mortgage shopping online, less than half go to their lender for home financing information. There’s no substitute for assistance provided by an experienced, licensed loan officer, so why not contact a knowledgeable Stearns mortgage loan originator today
Stearns Home Loans maintains a growing national network of branch offices. If we don’t have a branch in your city, answers to your home financing questions are just an email or phone call away. Contact us today.
When you’re ready to apply, Stearns Home Loans offers a fully online mortgage application with regular loan status updates. When you work with us, you get the best of both worlds: personalized service and a 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.
Jul 30, 2019