We often talk to first time home buyers who want to know the minimum credit score requirements for a mortgage in North Carolina. The answer, while not complicated, is not one where I can just spit out ONE number as a benchmark for all mortgage programs.
The minimum credit score requirements for a mortgage depends on which type of program you are applying for, what type of housing you are purchasing, and what down payment you will be making.
Minimum Credit Score Requirements for a Mortgage
When we are talking about a minimum credit score for a home loan, we are really saying that of the three credit scores you have – two of the three must be at or over the minimum credit score requirement for that mortgage program.
Minimum Credit Score Requirements for Home Loans
Minimum Credit Score Requirements for FHA Loans:
FHA Loans are often considered First Time Home Buyer loans, although you do NOT have to be a first time home buyer to qualify for the loan. The minimum down payment for a FHA Loan is 3.5% and the FHA monthly PMI is .85%. No matter what your credit score is – you can will get today’s best mortgage rate for a FHA loan, and your PMI factor will not change.
With FHA Loans, you can have a non-owner occupied borrower added to the loan – however the co-signor does not offset bad credit, so the person who is living in the house needs good credit.
FHA Loans can also help in situations where one spouse has good credit and the other spouse has all of the income.
Folks with minimum credit scores between 580 and 619. If you have excellent offsetting, compensating factors, like extra funds left over after closing, and very low debt to income ratios, you can get a FHA loan with minimum credit scores below 620.
The maximum debt to income ratio for FHA Loans with scores between 580 and 619 is 43.0000%. For folks with this credit score profile, the Down Payment can NOT be a gift.
For MOST people, the Minimum credit score requirements for FHA Loans is 620. For these folks, you don’t need as many compensating factors. Maybe you have some unpaid medical collections on your credit report, or you are getting Gift Funds for your down payment – then the next minimum credit score we will try to get you approved at is 620.
The FHA Loan Automated Underwriting system is set to approve loans with a minimum credit score of 640. Those with scores below 640 will sometimes get an automatic approval through the system – but usually those will be Manual Underwrites, meaning you will have more documentation requirements.
FHA Home loans have a 24 month waiting period for most Bankruptcy situations – however those that involved a foreclosure have a waiting period of 36 months.
Minimum Credit Score Requirements for USDA Loans:
USDA Home Loans have no down payment requirements. The monthly USDA PMI rate going to be lower in October of 2016, at .35%, and does not go up if you have lower credit scores. This lower Mortgage Insurance, will make USDA Home Loans in NC the absolute best program when compared to Conventional Loans and FHA Mortgages.
There are two credit score thresholds for a USDA Home Loan NC approval. The Automated Underwriting system (GUS) is good at approving borrowers who have a credit score of 640 or higher.
For buyers with credit scores in the 600 – 639 range, GUS will not issue an approval, and those loans require Manual Underwriting.
That basically means that an Underwriter must have strong compensating factors, such as a lower debt ratio, in order to “justify” approving your loan outside of the GUS system. All USDA Home Loans (no matter what the credit score) must go to the USDA Office for approval.
This typically means this loan is a longer approval process. The waiting period to get a USDA Home Loan after a Bankruptcy or Foreclosure is 36 months from the date of the transfer, discharge.
Minimum Credit Score Requirements for VA Loans:
In the Fall of 2013, the Bank credit score requirements for a VA Home Loan went down. Earlier this year, we had trouble getting Veterans with minimum credit scores of 610 approved – that is no longer the case.
In 2016, VA Loans for Veterans who have a minimum credit score of 600 are getting approved. VA loans require no down payment for loans under $417,000. There’s a small down payment required for loans between 417,000 and the maximum of $625,000. VA Loans do not have any monthly PMI fees. It’s a great benefit for Veterans!
Waiting period for Veteran’s who have a Chapter 7 or Chapter 13 Bankruptcy in their past, experienced a foreclosure or Short Sale is generally two years.
We have seen a few situations where a Veteran who experienced a credit trauma that was completely out of their control be able to buy a house within 12 months of the crisis – however that is RARE.
Minimum Credit Score Requirements for Conventional Loans:
Qualifying for a Conventional Loan requires a 3% down payment.If you have at least a 640 credit score, you might be eligible for Down Payment Assistance, that will be forgiven after you live in the house for a set period of time – therefore we refer to these as Conventional Mortgage Grants.**
**A Quick Note
We refer to these programs as “mortgage grants” because there are no payments to be made, there is no interest charge, and there’s no expectation that you will have to repay ANY of the money you receive for down payment, unless you move out of the property or refinance prior to the dates assigned by your specific down payment assistance program.
The literal term for this down payment assistance program is a “forgivable loan.” Under the terms of the program that best suits you, a portion of this down payment assistance will be forgiven on a schedule that we will share with you when you make loan application. These funds are available to us through NC Housing (NCHFA) and are available through other lenders in the state as well. The interest rates for these programs, however, will not vary from lender to lender as that is set by NC Housing.
If you have a minimum credit score of at least 700, this is often the best program available for you because the PMI rates are lower than those of a FHA Home Loan.
The PMI rates for a Conventional Loan are tiered based upon your credit score – so the higher the credit score, the lower the mortgage interest rate, and the lower the PMI rate we can offer you.
We do not make mortgage loans on Manufactured houses in NC. If you are considering a Condominium, we need to talk with you about the Condo Approval issued on the Project before we can let you know what type of mortgage loan is going to work on the unit.
We are disclosing information here for the purchase of Owner Occupied Residence loans. Non-owner occupied properties, second homes and refinances do have separate minimum credit score requirements. For other types of loans, and their minimum credit score requirements, please call us at 919 649 5058
It’s important to remember that your credit score is just a snapshot of what your credit looks like at a given moment. What I’m trying to say is… If you don’t currently have the credit scores you need to buy a home in NC – don’t give up. ANYONE can increase their scores to be able to buy a home, and normally we can help someone do that in as little time as just a couple of months.
If you have questions about minimum credit score requirements for a mortgage, or want to know ways that you can RAISE your credit scores, you might want to read the section on this page about: If you have a credit score of 600, or higher here are the steps we suggest you take NOW.
Need specific information about your situation and Minimum Credit Score Requirements for a Mortgage, call Steve and Eleanor Thorne 919 649 5058. We work with people in NC every month who thought they would never be able to buy a house, and found that it was much easier than they thought!
HI Eleanor
Is it true that FHA has reduced credit score requirements to a credit score of 600?
Angela – FHA has always had a minimum credit score of 580. The Banks, however, have been hesitant to make loans with scores that low. We do have situations where we CAN make FHA Home Loans with scores well below the 640 benchmark. Here’s some more information on requirements for lower credit score FHA Home Loans.
Hi Eleanor,
I was wondering when using a fha loan do you have to have closing cost money and down payment assistant money?
I live in the Rocky Mount Area. Do you all work with people that far?
Yes – certainly we work with folks all over the state of NC – please feel free to call us at 919 649 5058
Can i get s morgage loan only have one cradit score out of the 3 & it is $590 i have always paid in cash for everything in monroe nc
You CAN get a USDA Loan with only one score – however you are not quite at their minimum score yet. If you would open a secured credit card (two would be better) you should be there within 4 to 6 months! This is more inormation on Secured Credit Cards: https://ncfhaexpert.com/credit/secured-credit-cards/
Congratulations! You could be in a New Home for the New Year!
Hi I’m in the range of 595-613 in my credit score I know its someone that will give me a home loan I have the house picked out and I took a homebuyers class could you please help me
FHA Loans go from 580 all the way up – so it sounds like, from a credit score view, you might be in the right place. If you’ve taken a class, you know that there’s more than just a credit score for us to look at. We help folks with your type of credit profile all the time, and you can all us at 919 649 5058 for a no obligation conversation. We are mortgage lenders, not credit repair folks, so we are not selling you anything, we only want to help you buy a house!
Do you work with people who are doing the 3.5% down FHA construction loan? What are the requirements for that?
There’s two ways to do a 3.5% FHA Construction loan. With one, you are working with a builder who is building a house. Yes, we do those loans. The other one implies that you are buying a property and “fixing it up” or renovating it. We do not do those loans. Wells Fargo offers that program, it’s called a 203K Loan
Are there any first time home buyer programs out there. I’m so sick of renting currently is looking to buy me a nice home in the Carolina Trace area here in Sanford NC. I don’t even know were to go were to start I know my credit is over 600. I dont not know whom to trust or were to go I pray God send the right people my way.
Dedric, we would be glad to help you. Our company offers many first time home buyer programs, including USDA Home Loans, which require no down payment. We suggest that folks get the particulars of the home worked out, and then begin looking at homes. We can help you with the home loan, just call us at 919 649 5058
Hey Mrs Thorne my wife and I filed chap 13 in april 2012 and when i got hurt at work in june 2015 my paralegal told me it would be best to convert to a chap 7 so we did in nov 2015. We were discharged march 10 2016 and in july 2016 bought a new truck to restablish credit. My wife is a veteran who recieves disability from army every month. I just started a new job making better money than my previous job. My wifes score is 615 mine 588 ish. Can we qualify for first time buyers or do we have to waith a full 2 yrs because we are trying to purchase the home we currently rent for 1000 a month. Can you help us please.
Hi,Eleanor Thorne, I am sick of renting currently I am looking to buy a house in Charlotte nc.my 3 credit scores are Equifax 555 , Trans Union 587 and Experian 598 . I have been trying to buy an house for years,but running into people that just wants to take you for s money ride. I’m tired of the lies of buying a home; can you help?
Johnny, I think you will be getting an email from us, or you can call at 919 649 5058. It’s hard for me to give you a straight up answer, but given the info you’ve provided, you should be able to buy a house fairly soon.
Vincent, the VA will make you wait, based upon these guidelines. My sincere suggestion is that you open a secured credit card as soon as possible. The revolving credit will boost your scores much higher than a car payment can.
I have recently been turned down for a loan because the bank states that i need 170.00 to 180.00 to reach my net disposable that they require. My score is 609, I have found the perfect house for my family its where i am currently renting now and the landlord is wanting to sale. She is willing to sell to me at a very reasonable price. I pay 800.00 now monthly and my mortgage would only be 454.00 a month. What can i do to get a loan?
Kelli, I apologize but I would need to know much more to be able to help you. Please call us at 919 649 5058
Hello I’m looking to buy a home by Dec. My credit score 587 and my boyfriend is 671…do u think we will get somewhere
Try to keep any BAD information from hitting your credit reports, and add some GOOD information to your credit file, Here’s one way to do that, with a Secured Credit Card. We work with people all the time who need a little help to buy a house, it can happen for you!