Can You Still Buy The Home You Want With a FICO Score of 600 or Sometimes, Even Lower Than That?

Can you get a home loan with a credit score of 600? Yes you can, although a credit score of 600 usually falls into the “poor” credit category. With a FICO score of 600, your primary option for a home mortgage will be an FHA mortgage. The FHA mortgage program is designed to open home ownership opportunities to people who couldn’t qualify to buy homes before the program began in the 1930s.

What is a FICO score and what can it mean?

FICO stands for “Fair Isaac Corporation,” the first company to offer a credit score that evaluated the risk of lending to a person. The FICO credit score scale goes from 300 (worst) to 850 best. A credit score of 600 is low, but it isn’t the worst. The worst, “very poor” credit score range goes from 300 to 599. About 19% of people are in the “very poor” range. If you’ve got a credit score of 600, you’re a little bit above that level, along with about 10% of U.S. consumers. Credit scores aren’t 100% accurate in determining whether you’ll repay your mortgage, but lenders use them to determine your loan eligibility.

What kind of mortgage can you get with a credit score of 600?

Your primary option for a 30-year fixed rate mortgage or a 15-year fixed rate mortgage in California with a credit score of 600 is an FHA home loan. FHA loans have limits depending on the county where you want to buy a home. FHA loan limits can go up to $726,525 in higher-cost counties. If you’re a veteran, you may also be eligible for a VA home mortgage with a credit score of 600. There aren’t any official requirements for a credit score with a VA home loan.

Most of all, you shouldn’t rule yourself out of buying a home with a credit score of 600. You could be eligible for a conventional home mortgage in addition to an FHA or VA mortgage.

If you want to get the best interest rate or buy a home that’s more expensive than the FHA county loan limits, you’ll probably need to improve your credit score. A qualified mortgage specialist with experience can tell you what your options are and give you tips to increase your credit score. They can help you get the mortgage you need with a FICO score of 600 or higher.

Sources

https://thelendersnetwork.com/mortgage-with-600-credit-score/

https://www.fool.com/the-ascent/credit-cards/articles/heres-what-americans-fico-scores-look-like-how-do/

 

California Platinum Loans

  https://californiaplatinumloans.com

At Present, What’s Your DTI Ratio? How Does a High Debt to Income Ratio Hurt Your Chances of Getting the Mortgage You Need?

You probably know that your credit score affects the home mortgage rates you are eligible for. But did you know about your Debt-to-Income (DTI) ratio? The Debt to Income Ratio helps lenders to decide whether you can take on another monthly payment. It can play a role in loans of all types, from personal loans and student loans to fixed and adjustable-rate home mortgages.

What bills do lenders usually use to determine your DTI ratio?

Some lenders use their own formula to calculate a DTI ratio, but most DTI calculations add up the following payments:

  • Rent or house payment
  • Alimony or child support
  • Student, car loan, and credit card monthly payments
  • Other debt payments

Most DTI ratio calculations don’t include other bills you have to pay, like food, utilities, transportation, and taxes.

How do you calculate your DTI based on your income and payments?

Add up your DTI qualifying payments, including your rent or house payment, alimony, child support, and other loan and debt payments. Divide this total by your monthly gross income, which is your income before taxes. The number you’ll come up with will be your DTI ratio.

If your DTI is 35% or lower, you’ve got a good DTI ratio and lenders will view your applications favorably. Moving into a higher range of 36% to 49% DTI, your debt is running the risk of being too much. Lenders will probably ask for additional criteria to qualify you for a home loan. You can also work to reduce your DTI if it’s over 35%.

At 50% DTI or higher, you are paying half of your income toward the debt that you owe. This high amount leaves you vulnerable financially. You can still get a home loan with a 50% DTI ratio under specific circumstances. Some lenders can be flexible with DTI ratios. This is another reason to work with an experienced mortgage specialist who has worked with a number of mortgage lenders. They can help you understand your DTI and what loans you can qualify for.

Sources

https://www.wellsfargo.com/goals-credit/smarter-credit/credit-101/debt-to-income-ratio/

 

California Platinum Loans

  https://californiaplatinumloans.com