fico score for mortgage approval
In addition to the average FICO scores above, we can also compare average debt-to-income (DTI) ratios for approved mortgages. Side note : if you need a refresher on housing ratios, you can read about how they are calculated and what they mean in this DTI primer .
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Since your credit score is a big piece of the mortgage approval puzzle, a better FICO Score can translate into tens of thousands of dollars in interest savings over time. Todays Best Mortgage Rates
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The nation’s major banks are continuing to walk away from FHA-backed mortgages, according to the Urban Institute. “Bank and nonbank fico scores reveal that nonbanks brought the Agency median FICO.
Credit Score Versions. Credit scores are required for most mortgage loans purchased or securitized by Fannie Mae. The classic FICO credit score is produced from software developed by Fair Isaac Corporation and is available from the three major credit repositories.
In addition to these, there are also industry-specific FICO® Scores, used in mortgage lending, auto lending, and credit card approvals. Mortgage lenders tend to use older versions of the base FICO.
Get the Score Lenders Use to Evaluate Your Home Mortgage Loan. As you can see in this example using today’s national rates, a person with a FICO score of 760 or better will pay $209 less per month for a $216,000 30-year, fixed-rate mortgage than a person with a FICO score of 620 – that’s a savings of $2,508 per year.
Now that you know banks are denying folks with good-to-excellent credit every day, you’d be interested to know the average credit score for approved mortgages is a whopping 762! Furthermore, the average approved mortgage applicant comes up with a 21% down payment, has a monthly payment equal to 21% of household income, and rocks a total debt to income (DTI) of no more than 33%.
According to data compiled by Ellie Mae, substantial percentages of mortgage applications are receiving approvals with lower FICO scores than imaginable.
(FICO scores range from 300, indicating severe credit history problems and high risk of default, to 850, where the probabilities of missed payments or default are extremely low.) So where’s the easing.
620 is the minimum FICO score for a conforming (Fannie Mae or Freddie Mac) home loan, and that’s widely considered to be a below-average score. However, a 620 score isn’t necessarily "bad."