Credit scores largely determine what kind of rates you will receive on mortgages in Orlando. The higher your credit score is, the better rates you will be offered. This is because your credit report shows how good of a financial standing you are in. This affects your mortgage options because lenders want to know that if they lend you money, you will pay them back.
The lower your credit score is the riskier you appear. If you are considered a high-risk borrower, lenders will either refuse to work with you or they will charge you extra fees and make you get private mortgage insurance (PMI).
Private Mortgage Insurance
This is insurance that is paid for by the borrower but only protects the lender in case of any defaults on their payments. PMI is a security net for lenders and it makes them feel more at ease lending you money because they know that no matter what, they will be insured.
How Credit Score Affects Your Mortgage Options
If you have a low credit score, you may not be able to qualify for specific mortgages in Orlando. For conventional loans, your credit score needs to be a minimum of 620, however, if you want to receive the lowest rates on the market, your score will need to be at least 740.
Government-backed loans have a less strict credit score requirement than conventional loans. For an FHA loan, which is administered by the Federal Housing Administration, there is a minimum credit score of 500. With an FHA loan, however, you will be required to obtain PMI.
If you are an active military member or are a veteran in the armed forces, you could qualify for a VA loan by the United States Department of Veteran Affairs, with a credit score as low as 620. Or if you have a home in a rural area and are looking to obtain a USDA loan, which is administered by the United States Department of Agriculture, your score will need to be at least 640.
For non-conventional loans, such as a jumbo loan, there is a more strict qualification requirement. Your score will need to be at least 760 because jumbo loans allow you to borrow more money than a conventional conforming loan.
The Harper Mortgage Team would love to work with you and guide you throughout the home loan process.
For more details on how your credit score can affect different mortgage options, or to get started on your application today, please contact your local Orlando mortgage lender at 407-614-3095.