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What Credit Score Do I Need And How Much Money Down?

As a RE/MAX Real Estate Professional, I am often ask by a buyer looking for a home, How Much Down? What credit score do I need? Allow me to let you in on a best kept secret!

A Little Secret

There is a misconception out there that buyers need a substantial down payment in order to buy a home these days, due to tighter lending standards or because of the ?housing crisis? back in 2010. You may be surprised to learn that you can still purchase a home for as little as 3% down, or in some cases, for no down payment whatsoever, if the home is in a USDA area. Down payment programs include 3%, 5%, 10% or the conventional 20%.

As for credit score, lenders look for a median score of approximately 640. Factors also include annual income, job history and derogatory credit items. Even if you may have a foreclosure or short sale in your history, you may still qualify for a mortgage if it has been longer than 36 months and you have been current on all of your credit obligations.

Credit Check
The only real change to lending is that you can no longer qualify for a home with ?stated income?. There was a time you could fill out a one page loan application, provide a stated income and with a good credit score, you were approved. All mortgage loans now require full documentation of tax returns (two years), pay stubs and other miscellaneous items.

If you have any questions related to lending or to determine if you can qualify to purchase, please don?t hesitate to give us a call. We look forward to helping you.