Here’s the credit score you need for a mortgage

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Do you want a mortgage? If so, you’d better aim for a credit score above 650 or even 700.

Federal Reserve data show that 9 in 10 US mortgages are made to borrowers with a score of 650 or higher. Three quarters go to borrowers with a score above 700.

Any credit score between 670 and 739 is considered “good”, according to the credit rating agency Experiential. The national average score last December was 704, meaning the vast majority of mortgages go to Americans with above-average credit. Americans’ credit scores also vary widely by age. The average for those 18 to 29 is only 659, suggesting that many consumers in their 20s may have a harder time finding a mortgage lender than older Americans.

New York Fed / Equifax Consumer Credit Panel

Lender Target Credit Ratings, Fed Data Says Higher Than Official Ratings minimum of 620 for loans guaranteed by government agencies Fannie Mae and Freddie Mac, the cheapest option for many homeowners. A popular option for first-time home buyers is the Federal Housing Administration guaranteed mortgage, which you can qualify for with a score as low as 500 if you can also make a down payment of at least 10%.

Keith Gubinger, Vice-President on the mortgage website HSH.com, says the sweet spot for most future homeowners is 700 to 720. Borrowers with a credit score below this level might run into problems, like high interest rates and lower limits on the amount. that lenders will allow them to borrow. “You can get a mortgage with a low credit score,” he says. “But this may not be beneficial for your [home buying] transaction.”

Lenders are also much stricter today than in the years before the 2008 housing crisis, when the median loan went to borrowers with credit scores of around 700 and around 10% of borrowers were well below. from 600.

Worried about not qualifying?

There are several ways to increase your credit score. Paying your bills on time is obviously important. But the same is true of factors like the length of your credit history and the amount of unused credit you have.

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