Home Loan Options: What Can Your Credit Score Get You?

Credit scores can tell a lot about a person, especially when lending companies are concerned. Since high-value purchases demand less risk for lenders, they prioritize choosing borrowers with reliable payment practices. Because of this principle, borrowers typically get higher interest rates the lower their credit score.

FICO® (Fair Isaac Corporation) score is the most standardized measurement of a person’s financial liabilities. Mortgage lenders use this metric to assess a person’s creditworthiness, allowing them to set the right risk variables for every variable. While a better score leads to better loan options, different loan types will have varying minimum credit requirements.

Credit Scores and Loan Types

A credit score is computed by assessing a person’s income, assets, and debt levels concerning the prospective property they want to purchase. While a person’s financial history will dictate their lending options, they must also choose the right loan type. Prerequisites for each loan will vary, with some being more lenient than others. The better you understand each one, the more likely you’ll make the right decision for your financing needs.

Before you lock in with your lending provider, consider how your credit score will fair with these three loan types:

VA Loans

VA loans are overseen by the US Department of Veteran Affairs for currently active military personnel, retired veterans, and spouses of veterans under specific conditions. Its restrictions come with a huge reward in the form of waiving the initial down payment from VA loans.

Through a VA loan, you won’t be charged for mortgage insurance with your loan. Instead, you’re charged with a one-time funding fee. This value will depend on the type of military service you logged and the amount of down payment you’re willing to give voluntarily.

The minimum credit score needed to apply for a VA loan is 580. Besides this credit score requirement, keep in mind that you can only take out a VA loan for a primary residence. For this reason, you cannot take out multiple VA loans simultaneously for several properties.

FHA Loans

Unlike VA loans, FHA loans have less strict requirements for applicants. Additionally, their down payments can be as low as 3.5 percent, making them great options for refinancing mortgages.

Like VA loans, a minimum credit score of 580 is generally the qualification requirement for an FHA loan. Keep in mind that FHA loans are originated by private lenders. For this reason, the minimum score can vary from one lender to another. Additionally, if you can’t meet the credit score requirements, you can still apply for the loan by paying at least a 10 percent down payment.

Conventional Loans

Conventional mortgages are uninsured by government agencies and are instead regulated by Fannie Mae and Freddie Mac. These loans are excellent for people with exceptional credit scores at 740 and above. Additionally, conventional moans offer competitive rates and can be a great advantage for people with good financial standing. Since conventional loans have better perks overall, the minimum credit score for it is 620 at less.


Although it’s vital to get a decent credit score when looking for quotes, it’s not the only factor you should consider. Besides the different loan types, you should also look at your options of lending companies. You can get the best rates to appropriately match your financing needs by finding the right lending company.

If you’re looking for affordable home loans in Sacramento, CA, you’re in the right place. Hawkins Home Loans is the go-to solution for all your financing needs. Our team can give you the best loan options in the market, whether you’re buying a home, refinancing, or capitalizing on your home equity. Schedule an appointment with us today!