How high should my credit score be to purchase a home?
There is no absolute standard for what a credit score has to be in order to purchase a home. Credit scores
above 700 generally will qualify for lower interest rates, which can save you thousands of dollars over the course
of a loan. However, much lower scores will also allow you to qualify for a home loan, however you will typically have to
pay a higher interest rate.
It's important to note that there are actually three basic ingredients that come into play when qualifying for a loan and your credit history and score are only one of the categories.
The other two categories that lenders pay close attention to are:
-The amount of net worth (or equity) you have and...
-Your regular income or cash flow.
As a rule, any two of these three areas will help you qualify for a loan, and the importance of the third ingredient is affected by how strong the other two areas are. What this means is if you have a strong documented income or cash flow and you have a high net worth (equity), your credit score may be a bit lower but you still may qualify for very favorable loan terms.
Another critical component in determining your likelihood to be approved for a loan is the amount of money you will have
to use as a down payment. If you are able to put down 20% or more, lenders will be much more lenient in how the above three factors noted are weighted.
Hope this helps you,