Hey Dave - I really want to purchase a home but I don’t have great credit. Can you give me any insight into what kind of score I need to have to even be in the realm of being able to buy a home?  And if I don’t qualify, do you have any tips for me to repair my credit quickly?

James, Fruita

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Hey James!

First off, thank you so much for your question—it’s an important one, and you’re definitely not alone in wondering about this. A lot of people who are thinking about buying a home worry that their credit score might hold them back, so it’s great you’re looking into it now and being proactive.

Here’s the good news: you don’t need perfect credit to become a homeowner. In fact, many folks are surprised to learn how accessible homeownership can be, even if their credit isn’t stellar yet.

Most conventional home loans look for a credit score of at least 620. That’s kind of the baseline where lenders start to feel comfortable. If your score is in the mid-600s or above, you’re typically in pretty solid shape for conventional financing. But even if your score is lower than that, you still have options. For instance:

 FHA loans are a popular choice, especially for first-time homebuyers or those rebuilding credit. With FHA, you could qualify with a score as low as 580—and sometimes even lower with a larger down payment, though every lender is a little different.

 VA loans (for eligible veterans and service members) and USDA loans (for certain rural areas) can also be very forgiving when it comes to credit, sometimes going below 620, again depending on the lender.

Here's the bad news:  You must keep in mind, while lower scores can still get you approved, your interest rate and the loan costs will be higher. Even a small positive bump in your score before applying—say, from 615 to 650—can make a noticeable difference in what you pay over the life of the loan.  Life lesson.....the higher your credit score the better rate/deal you will get on your loan. 

A few quick tips if you’re working on your credit:

• Check your report for errors. You’d be amazed how often mistakes show up, and fixing them can give your score an instant boost.
• Pay down credit card balances. Credit utilization (how much you owe compared to your limit) is a big piece of your score.
• Keep making payments on time. Even small monthly payments, paid consistently, help build your credit history.

It might also help to talk with a local lender or mortgage broker now—even if you’re not quite ready to buy. They can look at your specific situation and tell you what programs you might qualify for today, and what small steps could open even more doors over the next few months.  An early meeting can pay great dividends in the long run.

I always say: it’s never too early to start planning. Even if you’re not there yet, getting a clear picture now helps you get there sooner—and often with more confidence and most likely better terms.

If you’d like, I’d be happy to connect you with a trusted local lender who’s great at working with buyers who have credit questions. Just let me know!

Dave Kimbrough
The Kimbrough Team – RE/MAX 4000

HAVE A QUESTION? ASK DAVE!
 dave@thekimbroughteam.com