One question I get with less frequency but still very often is…
What’s the minimum credit score I need to get a loan?
The answer is much more complex than you might think even when looking at a single loan product like a Fannie Mae of Freddie Mac (a/k/a Conforming) loan. CLICK HERE for a link to the Fannie Mae Eligibility Matrix. Jumbo Loan products vary from lender to lender depending upon who is buying the debt in the secondary market. We will focus on Fannie Mae loans as conforming loans represent the majority of all new loans being under written and Fannie Mae does most of these.
First, when the say a ‘Credit Score’ they are referring to your FICO credit score.
This chart can take a bit of getting used to but let’s look at 2 examples:
1) If you want to borrow up to 95% of the purchase price for a property you intend to occupy as your primary residence then you must have a credit score above 680 if you intend to borrow between 76 and 95% of the purchase price. If you are borrowing 75% or less of the purchase price then you must have a credit score greater than 620. Both of the assume a Debt:Income ration lower than, or equal to 36%.
2) If you want to borrow up to 90% of the purchase price for a property you do NOT intend to occupy as your primary residence then you must have a credit score above 680 if you intend to borrow between 76 and 90% of the purchase price. If you are borrowing 75% or less of the purchase price then you must have a credit score greater that 640. Both of the assume a Debt:Income ration lower than, or equal to, 36%
