What You Need to Know About Credit Scores Before Applying for an FHA Loan

FHA loans are loans with attractively low down payments and less stringent qualifications. That’s because this type of loan is insured by the Federal Housing Administration. This means FHA loans in Missouri are a popular choice for both lenders and borrowers. Before applying for one, however, here’s what you need to know:

Minimum Credit score

There is a minimum credit score that makes one eligible for an FHA loan. Your credit score is the first thing lenders would look at when you’re getting a loan. This is because your credit score is how lenders determine how well you’ll be able to pay them back. Unfortunately, those with a score of below 500 are ineligible for Federal Housing Administration loans.

How Does Credit Score Influence Down Payment?

It is best to understand the fact that the required down payment would also depend on your credit score. Typically, those with better credit scores can benefit from ridiculously low down payment requirements. Because of how much your credit score can influence financial transactions, make sure you get yours up as soon as possible.

What Is The Minimum Down Payment For A Suitable Credit Score?

Lenders consider those with decent credit scores as low-risk investments. With an FHA loan, you can pay for only 3.5% of the property’s value as a down payment. This is a ridiculously good deal compared to the usual 20% down payment other loans require.

FHA loans are an attractive deal to those with limited financial means. They offer a way for such individuals to comfortably own property without the risk of getting loaded with mortgage debt. With the help of the FHA loan, it’s that much easier to become a full-fledged homeowner.