645 Credit Score Mortgage Options and Lenders
645 Credit Score Mortgage Options
If you are trying to purchase a home or even refinance, you may have found that many lenders require applicants to have near perfect credit. Therefore, many home buyers with a 645 credit score do not think there are mortgage options available to them. There are mortgage programs and lenders that can help and you can still purchase your dream home even with a credit score of 645.
Although Fannie Mae guidelines permit credit scores as low as 645, some lenders have higher standards and require higher scores. This is especially the case if you are looking for a jumbo loan or even a conventional loan in some instances.
There are various 645 credit score mortgage options available to you regardless of whether you are purchasing or refinancing your home, or even an investment property.
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*If your lender is unable to help you with any of the loan programs referenced above, then you may be speaking with the wrong lender.
FHA Loan with a 645 Credit Score
FHA loans account for at least 25% of all mortgages in the United States today. They help individuals who have lower credit scores, a small down payment, or a high debt to income ratio. FHA guidelines also allow for credit scores as low as 500. However, lenders do have the autonomy to set their standards higher.
If you have a credit score of 645, we can help you to get approved for an FHA loan. Here are the basic requirements:
- Credit score of at least 500
- Down payment of 3.5% – 10%
- Two year work history
- Fully document income with pay stubs, W2s and tax returns
- No bankruptcies within the past two years
- The home must be your primary residence
There are also lenders who offer down payment assistance for individuals with credit scores over 620 who are planning to purchase their home using an FHA loan.
VA Loan with a 645 Credit Score
If you are a veteran, active military, or the spouse of a veteran then you may be eligible for an VA loan. VA loans according to the loan guidelines have no minimum credit score requirement. Therefore if you are eligible, you can get a VA loan with a 645 credit score even if other lenders tell you that you need a higher score.
Here are the benefits and requirements for a VA loan:
- No down payment
- No maximum loan amount
- No credit score requirement
- You need to document your income
- Higher debt to income ratios are allowed
- No recent bankruptcies allowed
- There is a VA funding fee
When you see the benefits of a VA loan, it appears to be an amazing mortgage program. If you are having difficulty getting approved for a VA loan with a 645 credit score, then let us help you. Read [VA loan requirements]
USDA Loan with a 645 Credit Score
USDA loans are for people who plan to purchase a home in a rural area with little to no down payment. The property will need to be located in an eligible area. You can search for property eligibility using the USDA eligibility tool.
You should be able to get a USDA loan with a 645 credit score because the USDA guidelines do not have a minimum credit score requirement.
What lenders will look for is a history of paying bills on time. So, you can have a lower credit score but the lender’s underwriter will make a judgement call based upon what they see on your credit report.
Requirements for a USDA loan:
- Employed for the past two years
- Positive credit payment history
- You must be a US Citizen
- Home must be your primary residence and cannot be a working farm
- No recent bankruptcies or foreclosures.
We can help you to qualify for a USDA loan with a 645 credit score. Just contact us to get the conversation started or read more about USDA loans here.
Conventional Loan with a 645 Credit Score
Conventional loans are the most popular mortgage product in the United States. However, the minimum credit score requirement for a conventional loan is 620. Having a credit score of 645 means you meet the basic credit score requirements per Fannie Mae guidelines, however you still may not qualify based upon specific lender requirements or negative items on your credit report.
An experienced loan officer can help you to deal with derogatory items on your credit report so you can qualify for a conventional loan.
The benefits of a conventional loan are the competitive rates and with a large enough down payment you will not have PMI. With a down payment less than 20%, you will have PMI but you do have the ability to have it removed over time.
Jumbo Loan with a 645 Credit Score
With the rise in home prices over the past few years, more buyers find themselves needing a jumbo loan to finance their purchase. The lenders who offer jumbo loans typically require higher credit scores. In some instances, the minimum credit score requirement could be over 700.
There are some jumbo loan options out there from a select group of lenders who can help you with a 645 credit score. You can expect both the down payment and interest rate to be a bit higher.
Complete this loan scenario form to get help finding a jumbo loan.
Investment Loan with a 645 Credit Score
If you are looking to purchase or refinance an investment property, you will find most lenders have a minimum credit score requirement that starts in the upper 600’s. Therefore, finding a lender who can offer an investment loan with a 645 credit score is going to be challenging.
Investment lenders are sometimes willing to overlook poor credit when there are compensating factors involved. These factors include but are not limited to the following:
- Large down payment
- Large cash reserves
- Seasoned investor with no mortgage defaults
- Extenuating circumstances justifying the low credit score
Meanwhile, there are a handful of lenders who do offer investment loans for people with low credit but you can expect less than favorable terms.
Lenders who offer Mortgages with a 645 Credit Score
These lenders may be able to help if you have a 645 credit score. However, their guidelines and product offering is constantly changing. Your best option is to let us match you with the lender who is the best option for your unique and personal loan scenario. Simply complete this lender match form and someone will contact you today.
Let us help you to get matched with either one of these lenders, or a different lender who may be a better fit for you. Contact us
Frequently Asked Questions
What credit score is needed to buy a house?
The credit score needed to buy a house will be based upon the type of mortgage you are applying for. Although you can get an FHA or a VA loan with credit scores as low as 500, credit scores over 680 are optimal and will help you to get the best rate possible.
Can I buy a house with a 645 credit score?
You can absolutely buy a house with a 645 credit score but you can expect your rate to be higher and you will find some lenders may not be able to help until your scores improve.
Do I need to fix my credit before applying for a mortgage?
It may not be necessary to fix your credit before applying for a mortgage unless the specific mortgage program you are seeking requires a higher credit score. You should speak to a seasoned loan officer before doing anything with your credit.
Should I pay off collections before applying for a mortgage?
It is recommended that you do not pay off collections before applying for a mortgage. Your loan officer will analyze your credit report and will help put a plan in place to get you approved for your mortgage which may include paying off some or all of your collections.
Why is it so hard to get a mortgage with bad credit?
Many lenders are looking to minimize their risk when it comes to lending. When a borrower does not make the mortgage payments and potentially goes into foreclosure, it is a potential loss for the lender.
One of the indicators of risk is a borrower’s credit score. It signals to the lender whether the applicant has a history or paying bills on time. They would prefer to lend to consumers who have better credit and a track record making on time payments. The good news is there are bad credit lenders who can help you regardless of what your credit score is.