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credit score is so important to buying a house especially a first house it is one of the things that your lender is going to look at to determine whether you are going to be loan eligible through their eyes so today I want to take the time to talk through the minimum credit scores that you're gonna need for every single one of the big loan programs I want to talk about why different banks have different criteria so you may actually be qualified to buy a house from one bank and not the other and I'm gonna talk about how lenders look at your credit score to determine your eligibility my name is Nicole nark I'm a realtor in Central Arkansas and today we're discussing credit score and how it affects buying your first home typically you might hear that you need to have three and a half percent down payment to use the FHA loan now if you want to go this route it's a great government backed loan program and you are gonna need at least a 580 credit score to be able to take advantage of that loan for the USDA Rural Development Loan you can actually buy a house with no money down it's a 100 percent financing if you buy a home in a rural area and can pass their requirements based off of income and other factors this is another great program now to take advantage of this one your score is going to have to be a little bit higher USDA requires a 640 and higher credit score because they're letting you buy a house without a down payment which is huge especially for you first-time homebuyers out there then you have the VA loan which current veterans as well as former veterans and occasionally even spouses of veterans can take advantage of now with the VA loan there's actually no credit requirement and they look at a whole different criteria of different factors in order to determine your eligibility and there is a lot more flexibility there but the big thing to think about is that lenders realize that it's not just your score that determines your loan eligibility so they're also gonna look at do you have a down payment if so how much do you have do you have savings investments like stocks do you have a steady income and how much are you regularly bringing in all of those things impact your eligibility to get a loan just because you have a super high credit score if you don't have a strong income or maybe you have bad debts a lot of credit card debts those can kind of negatively impact that insanely great credit score the opposite is also true if you have a credit score on the lower end maybe you're right below qualifying or just at that minimum score required but you a great job with steady income and you may have a little bit of credit card debt but you're super great at paying it on time lenders look at all of that and they use it to determine your eligibility now I want to share a story from my personal experience when I was going around looking for home loans and buying my first house before I even got into real estate now when I did this I immediately approached the bank that I banked with and I submitted an application through their mortgage division and I got denied for the loan and I was really surprised by this actually because I had it you know a job that I was had been working at for a while I I wasn't really high on my credit card balances or anything like that I didn't have any high outstanding debts what I found out is that banks have overlays and I want to discuss this because this is a very important thing that uh not a lot of Realtors and not a lot of lenders are gonna tell you about just because you need to have a minimum of a 580 credit score to get an FHA loan does it mean that the bank you approach is going to let you get that FHA loan with a 580 because some of these banks have overlays where they set their own minimum requirements before they can give you the loan and these overlays differ from bank to bank so the bank that I went to was requiring I think it was like a 640 as the minimum for FHA and I was right below that and they actually at the time didn't even explain to me why this was important and that they had that they just denied me but I quickly found out as I applied to other lenders I was totally in qualifying you know eligibility but I just didn't qualify through that specific lenders overlays and guidelines that they had for the loans that they give out to certain clients so I bring this up because if you have been denied a home loan don't stress about it and think that you can't get a loan anywhere else it's a good idea to try and figure out why that lender may have denied your application and if it's just a credit score issue but you know that you qualify for the basic you know score set by these government agencies then you might want to try applying with another lender who may have different guidelines so that you can still get approved for that loan for example me now in the real estate industry I know banks locally that will do the FHA loan at a 580 credit score and I also know some that will do it at a 626 forty or higher so I have that conversation with my clients when we're working together and we're initially talking about home loans and what you're looking for in your first house we talked about where is your credit score and to check that on your own I'll leave a link in the description there's a couple really great places Credit Karma myfico.com are great places to start where you can get a good idea of where your credit score is right now just to kind of monitor it and hopefully if you have anything or extra payments that you can make that'll boost your score even more before you start filling out these applications and really start the home buying process so you may be wondering how do these mortgage lenders pull your credit because there are three different credit bureaus that are reporting scores do they average them do they look at the highest the lowest and it is tricky but what they do is when a lender pulls your credit score they are out of the three scores are going to take the middle score and they're going to assign that to you and that's going to be your credit score for their application now this can kind of get tricky too because if you're on the borderline of qualifying you know you may have that one score that's high enough but if your other two are lower you're gonna need to work on your score if you have a spouse or a co borrower on that loan application with you they're gonna pull both credit reports you and the other person who's applying with you then whoever's middle score is lowest that's the score that they're going to use to assign for your file to see if you qualify so if you have any more questions about the credit scores that you need to qualify for a home loan and buy a house let me know in the comments below I'll be happy to answer any questions that you might have because I've been through this personally and I had borderline credit on qualifying for loans so I know that it may seem like everyone expects you to have perfect credit and that's not the case good credit with solid income and a good payment history is the best place to be when it comes for applying for these loans if you found this video helpful please like it and subscribe to my channel I put out videos all about buying homes and especially your first home as a first-time home buyer every single week stay tuned to the end screen where I will link some more videos that I recently made about how that process works in the meantime let me know if you have any questions and happy house hunting [Music]