Would-be homebuyers aren’t sitting on the sidelines because they don’t want to buy. They’re sitting out because they think they can’t. And sometimes, it’s their credit score that’s holding them back.
According to a Bankrate survey, 2 out of every 5 (42%) Americans believe you need excellent credit to qualify for a mortgage. That may be why, when renters are asked why they don’t own yet, “my credit isn’t good enough” comes up often.
Maybe you’re in the same boat. You look at your score, see it’s not where you want it to be, and assume buying your first place just isn’t realistic right now.
But here’s what you need to know.
Even though a lot of people assume you need flawless credit to buy a house, that’s not necessarily the case.
You Don’t Need Perfect Credit To Buy a Home
So, where’s this myth come from? Part of the confusion stems from the fact that the typical homebuyer today does have a fairly strong credit score. In fact, according to data from the NY Fed, the median credit score for all buyers is 775.
But that doesn’t mean you need a score that high to qualify.
Looking at recent homebuyers, a number were able to get a mortgage with scores below that threshold. Data shows 10% of scores were around 660. Which means some were higher than that and some were lower, but the median in that lowest 10th percentile was around that range (see graph below):
So, even if your score isn’t as high as you (click "Learn More" to finish the article)...
