What is the minimum score needed to get a first-time home-owners Mortgage.?
by Mortgage Rates on Thursday, October 28th, 2010 | 2 Comments
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It’s typically not directly related to the income [per se]. Most mortgage bankers do income tests to determine if you can afford payments.
The bank will look at your mortgage payment (principle plus interest plus property taxes & insurance] divided by your gross income. That is ratio #1.
Ratio #2 is Total Monthly debt [the above plus credit card payments plus car payments plus all other loan payments] divided by your gross income.
Typically ratio #1 should be below 28% and ratio #2 should be below 36%. Those were the rules when I bought and that could have changed a little.
These ratios will differ from lender to lender, but you can guage things by these rules of thumb.
as a rule 500 is the lowest score. there are 3 scores and the middle score needs to be 500 or better.