If you are considering buying a home, qualifying for a mortgage is the first step to making your dream of home ownership a reality.  Interest rates are at an all-time low, it’s a buyer’s market, and it’s a great time to purchase – there’s no doubt about it. But it’s important to understand that the home-buying market of 2012 is much different than the market prior to 2008.  If it’s been awhile since you purchased a home, you might be in for much more stringent credit score criterion.

In the wake of the economic downturn and the foreclosure crisis, the regulations have shifted toward tougher restrictions on credit and income.  What this means is that your credit score is more important than ever in making sure that: a) you qualify for the mortgage and, b) you get to take advantage of the low interest rates that make buying a good idea in the first place.

If your credit score is 720 or above, and you are able to put down a large down payment, you’re in luck.  This is the optimal situation that mortgage lenders are looking for and gives your lenders the confidence they need that you will be able to make the payments on your home.  However, if your credit score is 719 or below, you might run into problems – even if you have paid all of your bills on time.

So does that mean that you can’t get a mortgage if your score is lower?  Not necessarily.  Some banks allow lower FICO scores to pass under certain circumstances – particularly if a significant down payment can be applied to the loan – but the banks who are allowing this are becoming fewer and far between.  Credit scores between 620 and 719 might qualify, with higher interest rates, but anything below a 620 will likely not.

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