(Estimated timeframe: 1 – 3 days)
Before searching for your perfect home, you need to calculate how much your weekly or monthly salary can spend on a mortgage payment. Once you have a budget in mind, you also need to consider how much it will cost to maintain an apartment, including standard monthly common charges or maintenance fees, repairs, taxes, and utilities. Then, you have to factor in closing costs and your down payment, which can run from 10 percent to as much as 20 percent in the case of a co-op.
What Credit Score Do I Need to Buy a Home?
Fannie Mae and Freddie Mac both require a minimum FICO score of 620. However, you can have as low as a 580 FICO Score for an FHA Loan, which the Federal Housing Administration insures, providing you have a minimum 3.5% down payment, or a 500 FICO score if you can put down 10% of the purchase price. If you are eligible for a VA loan, there is no minimum required score.
What the score means
There are three national credit bureaus, Equifax, Experian, and TransUnion. Each could very well have a different FICO score for you, however. The Fair Isaac Corporation had provided several explanations for the variation, including different periods when the score was requested, varying information reported to the bureaus, and lenders reporting information to the bureaus at various times.
The scores range from 300 to 850. A bad credit score is 300 to 649, while a score of 650 to 699 indicates fair or average credit. Lenders consider your credit a good range if the score is in the 700 to 749 range. If your score is at least 750, you have excellent credit.
Since there are three scores, lenders typically use the middle score. Hopefully, there is not too much variation, though.