620 Credit Score Mortgage Options
There are many opportunities to qualify for a mortgage with credit scores of 620 or higher. Today’s lending guidelines will allow you to apply for, and weigh your options against most mortgage programs.
A 620 credit score is typically the minimum required for a conventional mortgage, allowing access to competitive interest rates with a low down payment. Borrowers with a 620 score can also qualify for FHA loans, which offer more flexible credit requirements and only 3.5% down, making homeownership more accessible.
You can absolutely get a mortgage with a 620 credit score. FHA loans are a popular option, requiring a minimum score of 580 and a down payment as low as 3.5%. Conventional loans may also be available, though they could require a higher down payment and come with slightly higher interest rates.
Your credit score plays a significant role in your ability to qualify for a mortgage. The scores also will determine whether there is a lender who can help and also what your rate will be.
Although you have these options available, not every lender is willing to help with credit scores of 620-659. Lenders have the ability to raise their standards. We can help you regardless of what your credit scores are. For over two decades, we have worked with homebuyers to purchase their dream homes with a 620 credit score or lower. To discuss these options, please complete this short form and we will contact you to review your options.
License Information – United Mortgage Corp (NMLS# 1330)
What is a 620 Credit Score?
A 620 credit score is considered to be fair from a lending perspective and it is the minimum required score to qualify for a conventional loan. Some of the large banks will not issue a mortgage approval unless your scores are higher. Meanwhile, a mortgage broker will have lower credit score options for homebuyers who have very low fico scores.
Is a 620 Credit Score Good Enough to Qualify for a Mortgage?
If you have a 620 credit score, you should be able to qualify for all of the agency mortgage programs. The agency programs are conventional (Fannie Mae and Freddie Mac), FHA, USDA and VA. Something to consider is although a score of 620 is acceptable per the program guidelines, some lenders will require higher scores.
If you are looking for an alternative mortgage program like a bank statement loan, a mortgage with a recent bankruptcy, or other niche programs, the credit score requirement may be higher.
Mortgage Programs Available With a 620 Credit Score
Below are some loan programs for individuals with a 620-659 credit score. Some of these programs have unique requirements which must be met regardless of what your credit scores are.
The programs and loan products referenced below all have similar closing costs with a slight variation on interest rates. The credit score requirements are different and they are also available in both fixed rate and adjustable rate loan terms. All of the loan options will allow you to refinance without a pre-payment penalty.
- FHA loans
- Conventional Loans
- VA Loans
- USDA loans
- Non QM Loans
If you believe you need a different loan product, there still may be other options with eligibility or guidelines that permit a lower credit score.
FHA Loan Requirements With a 620 Credit Score
FHA loans are a popular mortgage program for people who are looking for a low down payment, or are trying to qualify to purchase a more expensive home. The guidelines are set by HUD and the Federal Housing Administration.
- FHA mortgage guidelines require you to document your income.
- Mortgage insurance is mandatory for every FHA loan regardless of how much you put down.
- All borrowers must have a two year full time employment history. It can be a W2 job or self employed work.
- The down payment requirement is 3.5% of the purchase price.
- Competitive interest rates
There are programs available to purchase and refinance your house. This includes the 203k rehab loan, a streamline refinance, cash out refinance, and also a one time close construction loan.
Click to find out if you qualify for an FHA loan with a 620 credit score
Conventional Loan Requirements With a 620 FICO Score
Conventional loans are the most popular mortgage in the US for people who have a down payment of at least 5%. Fannie Mae guidelines for conventional loans are as follows:
- You must have a minimum credit score of 620.
- Minimum down payment of 5%.
- PMI ( mortgage insurance ) will be required if the down payment is less than 20%.
- All property types (1-4 Units) permitted
- You must have a two year employment history of full time employment. Small gaps in employment are permitted.
- No recent credit events are permitted (bankruptcies, foreclosures, or short sales).
- Competitive interest rates
If your scores are just below 620, it is possible to bump then in just a few days to qualify for a conventional loan.
VA Loan Requirements With a 620 Credit Score
VA Loans are for active military, veterans, or spouses of veterans who have VA eligibility.
- VA loans have no down payment requirement
- You must have VA loan eligibility
- The VA funding fee is required on every mortgage
- You must fully document your income and assets
- You can qualify with a 620-659 credit score, it is also possible to have scores much lower than that and still qualify
- No mortgage insurance required
- Lower interest rate with good credit
This is a great mortgage program and it a huge benefit to veterans who have served our country.
USDA Loan Requirements with a 620 Credit Score
USDA loans are for individuals who are looking to purchase a home in a rural area.
- You must fully document your income and assets by providing pay stubs, bank statements, W2s and tax returns.
- No down payment is required for USDA loans.
- Credit scores of 640-659 is acceptable for a USDA loan.
- The home must be in a USDA eligible location which can be found by reading the USDA mortgage guidelines.
- The home cannot be a working farm or be used for business purposes.
- No mortgage insurance required.
USDA loans have income limits which means if you make too much, you may not qualify. The home you purchase also cannot be a working farm or an income producing property.
If you have credit scores of 620-659 and are looking to qualify for a mortgage, then click here to get connected with us for a free consultation with no credit pull.
Applying for a Mortgage with a 620 Credit Score
When completing your application for a mortgage, your FICO scores will be a key element on whether we can approve your loan application. Many consumers monitor their credit using apps that are not entirely accurate. Therefore, we recommend doing everything you can to try and boost your scores well over 620.
Once your application is fully filled out, we will pull the credit report and the debt (liabilities) will be imported into the mortgage application. It is at that moment where your credit scores will be assessed by your loan officer. On that day, you can receive a pre-approval based upon the findings of the automated underwriting system (AUS).
Next, the application will be sent to the underwriter along with copies of your pay stubs, bank statements, tax returns, and W2’s. After a formal financial review, you may receive your loan approval pending conditions.
The typical conditions are an appraisal, verification of employment, payoff of some debt, and verification that the home has homeowner’s insurance.
To improve your approval chances, focus on reducing your debt-to-income ratio, saving for a larger down payment, and ensuring all financial documents are in order. Working with lenders specializing in borrowers with fair credit can also help secure better terms.
How Does a 620 Credit Score Affect Your Mortgage Interest Rate?
Interest rates for all mortgage programs are impacted by your credit scores. The higher the credit scores, the better your interest rates will be. We have seen rates for various programs have a rate that have a 2% difference between those with poor credit vs those with excellent credit.
What does this mean? You should start working on your credit scores well before you are ready to apply for a mortgage. If you do not have time to do that, one of our loan officers may be able to help boost your scores quickly to help with your interest rate.
Down Payment Requirements for a 620 Credit Score
The down payment requirements should not change for FHA, VA, and USDA loans with a score of 620. However, the automated underwriting system could return a down payment requirement that may be higher for a conventional loan.
Alternative mortgage programs will have higher down payment requirements with lower credit scores.
620 Credit Scores Unlock Down Payment Assistance
There are various down payment assistance programs out there available to first time home buyers. However, most require a credit score of 620 or better. You will also be required to take a first time home buyer’s course to make sure you are prepared for the responsibility of home ownership.
We have an opportunity to offer you down payment assistance provided by the lender. It is much easier to manage it this way without having to go to a third party for the assistance funding. If you would like to discuss, then call us at 732-761-9041.
Using a Co-Signer to Qualify for a Mortgage with a 620 Credit Score
Many borrowers who have low credit scores look to add a co-signer with good credit to the application. Unfortunately that will not help in most instances because mortgage guidlines require the lender to use the lower score between all borrowers on the loan application and this includes co-signers.
Where a co-signer can help is if your income is not high enough to qualify for the mortgage amount that you need. Adding the co-signer can help with that situation. However, your co-signer’s income and debt will be used and considered during the qualification process.
Tips for Successfully Obtaining a Mortgage with a 620 Credit Score
With a 620 score you are borderline in the ability to get approved for a conventional loan. To help gain an approval, your total financial picture will be evaluated. The underwriter will look for compensating factors that will help with your approval. Some of these positive financial factors include a larger down payment, a low amount of debt, job stability, and extra cash reserves.
We suggest keeping the balances low on your credit cards and do not make any purchases such as a car with large monthly payments. The additional payments will raise your debt-to-income ratio and will lower your approval amount.
You should keep an open mind and consider various mortgage programs especially if your credit report shows scores under 620.
Frequently Asked Questions – 620 FICO Score Mortgage
Q: Can I get a mortgage with a 620 credit score?
A: Having a credit score of at least 620 opens up many mortgage options for you and there is no reason why you cannot obtain a mortgage.
Q: How good is a 620 credit score?
A: A 620 credit score is considered to be “fair” but we can still help with your mortgage.
Q: What are the interest rates when you have a 620 credit score?
A: The interest rates with a 620 credit score are going to be “fair” because that is exactly what your credit score is. Lenders adjust their interest rates based upon the credit scores of the borrowers. Therefore, the higher the credit scores, the lower the interest rates will be. You can secure a fixed rate for 30 years with a score of 620.
Q: What is the minimum credit score needed to get a loan?
A: FHA and VA guidelines allow for scores down to 500. While most lenders are unwilling to go that low, we can help you.
Q: Can I Get a Conventional Loan with a 620 Credit Score?
A: The minimum credit score for a conventional loan is 620 which means you should do everything in your power to continue to raise your scores. If you are close to a 620, then a good loan officer can help you to raise them so you can qualify for a conventional loan.
Q: Will having a higher down payment help me qualify for a mortgage with a 620 credit score?
A: Having a large down payment will definitely help your chances at securing a mortgage approval.
Q: Can I apply for government-backed loans with a 620 credit score?
A: You can apply for government loans such as FHA, VA or USDA with 620 scores.
Q: How does my credit history affect my ability to secure a mortgage with a 620 credit score?
A: A positive credit history without any recent credit events such as a bankruptcy or foreclosure.
Q: Can I refinance my mortgage if my credit score improves after obtaining the loan?
A: You can refinance your mortgage if your credit scores improve but you need to realize a net tangible benefit. A benefit of refinancing is a lower rate, lower payments, or improved loan terms.
Q: Are there special programs for first-time homebuyers with a 620 credit score?
There are many state and federal programs, such as FHA loans or down payment assistance programs, cater to first-time buyers with fair credit scores. We also offer down payment assistance for individuals who have a 620 or better credit score.
Contact us to discuss your options.