Question 1

What credit score do I need to buy a home?

Accepted Answer

The minimum credit score required depends on the loan program. FHA loans allow credit scores as low as 580 with a 3.5 percent down payment, or as low as 500 with a 10 percent down payment. Conventional loans typically require a minimum score of 620, though better rates are available at 740 and above. VA loans do not have a government-mandated minimum, but most lenders require at least 580 to 620. USDA loans generally require a 640 minimum score. Keep in mind that while these are minimum thresholds, a higher credit score will qualify you for better interest rates and terms, potentially saving you tens of thousands of dollars over the life of your loan. At NMHL, we work with borrowers across the credit spectrum and can recommend loan programs that match your current score while advising on strategies to improve it for even better terms.

Question 2

How does my credit score affect my mortgage rate?

Accepted Answer

Your credit score is one of the most significant factors determining your mortgage interest rate. Lenders use risk-based pricing, meaning borrowers with higher credit scores are considered lower risk and receive lower rates. The difference can be substantial. A borrower with a 760 score might receive a rate that is 0.5 to 1.0 percent lower than a borrower with a 640 score on the same loan program. On a 300,000 dollar 30-year loan, that difference could mean paying 30,000 to 60,000 dollars more in interest over the life of the loan. Credit scores also affect mortgage insurance rates on conventional loans and can determine which loan programs you qualify for. At National Mortgage Home Loans, we pull your credit report early in the process and provide transparent guidance on how your score impacts your specific loan options and what steps might improve your rate.

Question 3

Will applying for a mortgage hurt my credit score?

Accepted Answer

Applying for a mortgage does involve a hard credit inquiry, which can temporarily lower your score by about 5 to 10 points. However, the credit scoring models used by FICO and VantageScore recognize that shopping for a mortgage is responsible financial behavior. When you apply with multiple lenders within a 14 to 45 day window, all of those inquiries are typically counted as a single inquiry for scoring purposes. This means you can and should compare offers from multiple lenders without worrying about multiple hits to your score. The small temporary decrease from a mortgage inquiry is far outweighed by the benefits of finding the best rate and terms. Your score will typically recover within a few months. At NMHL, we encourage borrowers to get pre-approved and compare options to ensure they are getting the most competitive deal available.

Question 4

How can I improve my credit score before applying?

Accepted Answer

Improving your credit score before applying for a mortgage can save you significant money. Start by reviewing your credit reports from all three bureaus for errors and dispute any inaccuracies. Pay down credit card balances to below 30 percent of their limits, as credit utilization is the second most impactful factor after payment history. Make all payments on time going forward, including utilities and subscriptions. Avoid opening new credit accounts or making large purchases on credit in the months before applying. If you have collections or charged-off accounts, discuss with your loan officer whether paying them off will help or hurt your score, as the impact varies. Becoming an authorized user on a family member account with a long positive history can also boost your score. These strategies can take 30 to 90 days to show results. At National Mortgage, our loan officers provide personalized credit improvement plans to help you reach your target score as quickly as possible.

Question 5

What is the difference between FICO and VantageScore?

Accepted Answer

FICO and VantageScore are the two main credit scoring models, and they can produce different scores from the same credit data. FICO scores have been the mortgage industry standard for decades, though the specific version used is evolving. FICO scores range from 300 to 850 and weigh payment history at 35 percent, credit utilization at 30 percent, length of history at 15 percent, new credit at 10 percent, and credit mix at 10 percent. VantageScore also ranges from 300 to 850 but uses slightly different weighting and may score consumers with limited credit history differently. The free credit scores you see from banking apps and credit monitoring services are often VantageScore, which can differ from your FICO score by 20 points or more. For mortgage lending, FICO scores from all three bureaus are pulled and the middle score is typically used. At NMHL, we use the actual mortgage FICO scores during pre-approval so you know exactly where you stand.

Question 6

Can I get a mortgage with bad credit?

Accepted Answer

Yes, it is possible to get a mortgage with less-than-perfect credit, though your options may be more limited. FHA loans are one of the most accessible programs for borrowers with lower credit scores, accepting scores as low as 580 with 3.5 percent down or 500 with 10 percent down. Some non-QM loan programs cater specifically to borrowers with credit challenges, using alternative documentation methods to qualify. Bank statement loans, asset-based loans, and DSCR investment property loans may be available depending on your overall financial picture. While you can get a mortgage with lower credit scores, you should expect to pay higher interest rates and potentially higher mortgage insurance premiums. In some cases, waiting 6 to 12 months to improve your credit can save you considerably more than the cost of waiting. At National Mortgage Home Loans, we evaluate your complete financial profile and recommend whether to move forward now or take steps to strengthen your application first.

Question 7

How do late payments affect my mortgage application?

Accepted Answer

Late payments on your credit report can significantly impact your mortgage application, but the degree depends on how recent they are, how many there are, and how late they were. A single 30-day late payment from three years ago will have much less impact than multiple 60 or 90-day late payments in the past year. Most conventional loan programs want to see a clean payment history for the most recent 12 months. FHA guidelines are somewhat more flexible but still scrutinize recent late payments during underwriting. Late mortgage payments on an existing home loan carry more weight than late payments on credit cards. If you have late payments on your record, be prepared to provide a written explanation of the circumstances. Documented hardship events such as job loss, medical emergencies, or divorce are generally viewed more favorably by underwriters. At NMHL, we review your credit history in detail during pre-approval and advise on how specific items may affect your approval.

Question 8

Does my spouse's credit score matter for a joint mortgage?

Accepted Answer

When applying jointly with a spouse, both credit scores are pulled and both matter. For conventional loans, the lender uses the lower of the two middle scores to determine rate and eligibility. This means if you have a 780 score but your spouse has a 620, the lender will use the 620 score for pricing. In some cases, it may be advantageous for the higher-scoring spouse to apply alone, though this means only that person income can be used to qualify. FHA loans have similar guidelines, using the lower middle score for joint applicants. One strategy some couples use is to have the higher-scoring spouse apply solo if their income alone is sufficient to qualify, then add the other spouse to the title after closing. At National Mortgage, we evaluate both scenarios during pre-approval and recommend the approach that gives you the best combination of loan amount and interest rate.

Question 9

How long after bankruptcy can I get a mortgage?

Accepted Answer

The waiting period after bankruptcy depends on the type of bankruptcy and the loan program. For Chapter 7 bankruptcy, the waiting periods are typically two years for FHA and VA loans, and four years for conventional loans from the discharge date. For Chapter 13 bankruptcy, FHA and VA loans may be available after one year of on-time plan payments with court approval, while conventional loans typically require a two-year wait from the discharge date or four years from the dismissal date. USDA loans generally require a three-year wait after Chapter 7 discharge. During the waiting period, focus on rebuilding your credit by using secured credit cards responsibly, making all payments on time, and keeping credit utilization low. At NMHL, we help borrowers who have experienced bankruptcy understand their timeline to homeownership and create a plan to be mortgage-ready when the waiting period ends.

Question 10

What is a credit rescore and how can it help?

Accepted Answer

A rapid credit rescore is a process available through mortgage lenders that can update your credit score within a few days rather than waiting for the normal monthly reporting cycle. If you pay down a credit card balance or resolve a disputed item during the mortgage process, a rescore can reflect those changes almost immediately. This can be valuable when you are just a few points below a threshold that would qualify you for a better rate or a specific loan program. For example, if your middle score is 577 and you need a 580 for FHA, paying down a credit card and requesting a rescore could push you over the line. Rescores are not free and typically cost 25 to 50 dollars per account per bureau, but the savings from qualifying for a better rate can far exceed this cost. At National Mortgage Home Loans, our loan officers identify rescore opportunities during pre-approval and guide you on exactly which actions will have the greatest impact on your score.

Question 11

Do student loans affect my ability to get a mortgage?

Accepted Answer

Student loans affect your mortgage application primarily through your debt-to-income ratio. Lenders include your monthly student loan payment when calculating how much of your income goes toward debt obligations. For loans in active repayment, the actual monthly payment is used. For loans in deferment or forbearance, the calculation depends on the loan program. FHA uses 0.5 percent of the total loan balance or the income-driven repayment amount, whichever is documented. Conventional loans use 0.5 percent of the outstanding balance or 1 percent of the outstanding balance, depending on the specific guideline version, unless a fully amortizing payment is documented. Income-driven repayment plans that show a lower monthly payment can help your qualification if properly documented. Student loans in good standing do not negatively impact your credit score and can actually help by showing consistent payment history. At NMHL, we factor your student loan situation into our initial assessment to give you an accurate picture of your buying power.

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Credit Scores & Qualifying

Frequently Asked Questions

What credit score do I need to buy a home?

Still Have Questions? We're Here to Help

All Credit Scores & Qualifying Questions

How does my credit score affect my mortgage rate?

Will applying for a mortgage hurt my credit score?

How can I improve my credit score before applying?

What is the difference between FICO and VantageScore?

Can I get a mortgage with bad credit?

How do late payments affect my mortgage application?

Does my spouse's credit score matter for a joint mortgage?

How long after bankruptcy can I get a mortgage?

What is a credit rescore and how can it help?

Do student loans affect my ability to get a mortgage?

Can't Find Your Answer?

Our Clients' Experience

Related Resources

Our Presence

Your Dream Home Starts Here

Lower Your Rate Today

Build Your Portfolio

Credit Scores & Qualifying

Frequently Asked Questions

What credit score do I need to buy a home?

Still Have Questions? We're Here to Help

All Credit Scores & Qualifying Questions

How does my credit score affect my mortgage rate?

Will applying for a mortgage hurt my credit score?

How can I improve my credit score before applying?

What is the difference between FICO and VantageScore?

Can I get a mortgage with bad credit?

How do late payments affect my mortgage application?

Does my spouse's credit score matter for a joint mortgage?

How long after bankruptcy can I get a mortgage?

What is a credit rescore and how can it help?

Do student loans affect my ability to get a mortgage?

Can't Find Your Answer?

Our Clients' Experience

Related Resources

Understanding Mortgage Basics

How to Prepare for Your Mortgage Application

Common Mortgage Mistakes to Avoid

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