Even though a lot of mortgage information is now available online, most consumers still overestimate the minimum credit score and down payment needed to qualify for a mortgage. Do you know what they are? How about a low-down-payment programs?
Here are the minimum requirements to qualify for a Fannie Mae loan but remember these numbers may not apply to other loans:
Minimum Credit Score - 580. What is a credit score? It is a three-digit number that relates to how likely you are to repay debt. Banks and lenders use it to decide whether they'll approve you for a credit card or loan. The highest score would be 850.
Minimum Down Payment - 3%. What is a down payment? An initial payment made when something is bought on credit.. It is measured as a percentage. If you buy a house for $500,000, a 3% down payment will be $15,000
Debt to Income Ratio - 50%. What is DTI? You divide your monthly debt payments (rent, car payment, student loan, personal loans etc) by your monthly gross income. The ratio is expressed as a percentage, and lenders use it to determine how well you manage monthly debts -- and if you can afford to repay a loan.
Source: “Consumers Continue to Overestimate Mortgage Requirements,” Fannie Mae Perspectives (June 5, 2019)