As we all know, a good or bad credit score can determine the terms of the loan for a first time homebuyer. In the case of good credit, certain incentives can be taken advantage of, with the opposite being true for those with bad credit. But, what happens when a homebuyer’s credit history does not extend for more than a few years? Is there a minimum credit score for first time homebuyers? The short answer is yes, a minimum score is required, but this minimum score can vary depending on the lender and the type of loan.
For example, the majority of lenders require a minimum credit score of 620 to 640, but this can vary depending on the type of home loan you are looking into and qualify for. First time homebuyers, with a low income, can qualify for an FHA loan with a minimum credit score of 580 with a 3.5% down payment, but may also qualify with a credit score as low as 500 if they make a larger down payment (10% in most cases). On the other hand, a USDA loan requires a minimum score of 640 or higher. This is why it is such a good idea to shop around for different home loans, even for those with low incomes.