Credit scores play a pivotal role in a person’s eligibility in obtaining a suitable mortgage, especially since it impacts several factors – from your qualification down to the interest rate you need to pay. The number serves as a benchmark for lenders to estimate your risk, so the lower the score, the more precarious you become.
Different Credit Scores and What It Means
Generally, lenders stick to brackets when viewing your credit score. While there are no set standards in the industry, the range below can be a good basis when considering your mortgage approval for FICO scores:
- 740 – 850 – Known as the highest FISCO score possible, borrowers can quickly gain credit approvals and get the lowest interest rates.
- 670 – 740 – Falling only second behind, this range is characterized as a good credit rating, which means you can qualify for most loans.
- 620 – 670 – Standing at an average rating, borrowers can still get approval, but it typically comes with higher interest rates.
- 580 – 620 – For borrowers that need to get their foot in the door, this subprime credit can still let borrowers get a mortgage but expect to settle with less-than-desirable terms.
- 300 – 580 – Down to the lowest scale in the FICO credit scoring system, borrowers with low scores will have little-to-no chance of getting approval for a mortgage unless you improve your score.
What If You Have A 680 FICO Score? What Mortgage Loans Can You Apply For?
As mentioned above, a 680 FICO score is a good indicator and means you can qualify for most home loan programs, though the interest rates will not be as competitive compared to borrowers with perfect credit scores. With that in mind, some of the mortgage loans you can obtain with a 680 credit score include the following:
- Conventional – 3% Down payment
- Fannie Mae HomeReady/Freddie Mac Home Possible – 3% Down payment
- FHA Loan – 3.5% Down payment
- VA Loan – 0% Down payment
- USDA Loan – 0% Down payment
On top of a wealth of options for your mortgage loans, you also have the flexibility to choose a program that suits your budget and needs.
How A 680 FICO Score Affects Your Mortgage Opportunities
Having a credit score of 680 nowadays is no longer sufficient as lenders demand a higher score if you want to qualify for better mortgage rates. The FICO credit scoring system can be limiting in more ways than one if you don’t meet the mark – from reducing your mortgage options when buying your first home or financing your start-up venture.
Since a FICO score of 680 puts you in the lower end of the “above average” spectrum, finding the right lender is crucial if you want to have better mortgage rates.
Phoenix Home Loans with Desert Springs Mortgage
If you’re looking to get the best deals on your mortgage with only an average credit score, our expert mortgage lenders in Arizona can introduce better alternatives that can help you come closer to unlocking the coverage that suits your needs. Get in touch with us at (623) 432-1309 and see how we can help you obtain the ideal mortgage for you!