A person’s credit score plays a major role in their ability to secure a mortgage loan. Not only does it impact their initial qualification for a loan, but it also influences their interest rate, down payment requirements, and other terms of their mortgage.
For those who are planning to buy a home, they need to know that some loan types require a minimum score of 640 for conventional loans, while others go down to 500 for some FHA loans.
If the person’s score is low, it means they are a risky bet for a lender. It means that there’s a bigger chance they won’t be able to pay their bills on time. To compensate for the extra risk, lenders will boost the interest rate to protect themselves.
A review of Credit Karma members shows that the average credit score for first time homebuyers in the US is 684, a number that varies depending on where you live.