Yes, you can buy a house with a 654 credit score In fact, you have a couple of main options. With a credit score of 580 or higher, you can qualify for an FHA loan to buy a home with a down payment of just 3.5%. If you have a credit score of 620 or higher, you can qualify for a conventional loan, which typically requires a down payment of 20%.
FHA Loans for 654 Credit Scores
FHA loans are insured by the Federal Housing Administration (FHA), which means that the government is essentially backing the loan. This makes FHA loans a good option for borrowers with lower credit scores, as they are more likely to be approved for a loan.
To qualify for an FHA loan with a 654 credit score, you will need to make a down payment of at least 3.5%. You will also need to meet other requirements such as having a steady income and a good debt-to-income ratio.
Conventional Loans for 654 Credit Scores
Because conventional loans are not government-insured, they are usually harder to qualify for than FHA loans. On the other hand, conventional loans frequently have interest rates that are lower than FHA loans, which can ultimately save you money.
To qualify for a conventional loan with a 654 credit score, you will need to make a down payment of at least 20% You will also need to meet other requirements, such as having a good credit history and a steady income
Other Factors to Consider
In addition to your credit score, there are other factors that lenders will consider when you apply for a mortgage. These factors include:
- Your income: Lenders want to make sure that you can afford to make your monthly mortgage payments.
- Your debt-to-income ratio (DTI): Your DTI is the percentage of your gross monthly income that goes toward paying off debt. Lenders typically prefer borrowers with a DTI of 50% or lower.
- Your assets: Lenders may consider your assets, such as your savings and investments, when determining your ability to repay the loan.
- Your employment history: Lenders want to see that you have a stable job history.
Tips for Improving Your Credit Score
There are a few things you can do to raise your credit score if you plan to purchase a home soon. These include:
- Pay your bills on time: This is the most important factor in your credit score.
- Keep your credit utilization ratio low: Your credit utilization ratio is the amount of credit you are using compared to your total credit limit. Aim to keep this ratio below 30%.
- Dispute any errors on your credit report: You can get a free copy of your credit report from each of the three major credit bureaus (Experian, Equifax, and TransUnion) once a year. Review your credit reports carefully and dispute any errors you find.
- Become an authorized user on a credit card with good credit: This can help you build your credit history without having to open a new credit card.
Buying a house is a big decision, and it’s important to make sure you are financially prepared. If you have a 654 credit score, you have a couple of options for buying a house. You can qualify for an FHA loan with a down payment of just 3.5%, or you can qualify for a conventional loan with a down payment of 20%. Be sure to shop around for the best mortgage rates and terms, and consider working with a mortgage lender who can help you through the process.
What Is A Good Credit Score To Buy A House?
|
Mortgage Type |
Minimum Credit Score |
|
Conventional loan |
620 |
|
FHA loan (3.5% down payment) |
580 |
|
FHA loan (10% down payment) |
500 – 579 |
|
VA loan |
No industry-standard credit score requirement (Rocket Mortgage® requires a 580 score) |
|
USDA loan |
No industry-standard credit score requirement (most lenders require a 640 score) |
How Do Lenders Determine Your Credit Score?
Your Credit Profile Excellent 720+ Good 660-719 Avg. 620-659 Below Avg. 580-619 Poor ≤ 579
When do you intend to buy your house? Found a house; signed a purchase agreement; offer pending; will you buy in 30 days, 2 to 3 months, 4 to 5 months, or 6 months from now?
Do you have a second mortgage?
Are you a first time homebuyer?
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How Much of a Home Loan Can I Get with a 650 Credit Score
FAQ
How much can you get approved for with a 650 credit score?
What credit score do I need to buy a $250000 house?
Is 654 a good credit score to buy a car?
What is the lowest acceptable credit score to buy a house?
What credit score do you need to buy a house?
Whether your credit is flawless or average, here’s what to expect when you apply for a mortgage. The minimum credit score to buy a house is generally 620, but it can vary depending on the kind of loan you’re seeking.
Is a 654 credit score a fair score?
Our content is accurate to the best of our knowledge when posted. A 654 credit score is generally a fair score. While a lot of people have fair scores, you may still find it difficult to get approved for credit without high fees and interest rates with a score in this range. “Fair” score range identified based on 2023 Credit Karma data.
Should I buy a home with a 660 credit score?
Lenders will use a decision score of 660 to decide whether to offer you both a loan and determine the terms. A major benefit of buying together is qualifying for a larger loan amount because your combined income is higher than your individual income.
Can you buy a house with a low credit score?
Certain loan types even allow you to buy a house with a credit score as low as 500. It’s possible to buy a house with a wide range of credit scores, but the higher your credit score, the more likely you’ll be able to secure more favorable loan terms with your lender.