If you’re considering buying your first home in Hawaii soon, you may be wondering if you can qualify for a mortgage - and you’re not alone. Recent research conducted by Fannie Mae found that many consumers hesitate to apply for a mortgage because of concerns that their credit score was not high enough to qualify for a home loan. Others incorrectly assumed they needed a 20% down payment, or that their current debt levels were too high.
We’d like to clear up these misconceptions about qualifying for home financing with Compass Home Loans.
1. The minimum credit score required for a home loan is probably lower than you think.
Half of those interviewed by Fannie Mae researchers said they were unsure of the minimum credit score needed to qualify for a loan.
- 14% thought the FICO score needed to be higher than 680.
- 32% thought it needed to be higher than 620.
The minimum credit score to apply for a conventional home loan with Compass Home Loans is 620, but you may qualify for other loans with a lower minimum score.
While a higher score may help you secure a lower interest rate, it may be well-worth buying your first home now if property prices are rising in your city, or if you find a starter home at an attractive price.
2. Down payment requirements for loans start at just 3.5%. Some offer zero down options.
Of the survey respondents, 13% thought the minimum was 20% of the loan amount, while 1 in 5 thought the minimum was 6-10%. Here’s more good news: Federal Housing Administration (FHA) home loans require just 3.5% down for qualified applicants. Compass Home Loans also offers loan programs by the U.S. Department of Agriculture (USDA), as well as the U.S. Department of Veterans Affairs (VA), with zero down payment options for qualified buyers.
3. Your allowed monthly debt level may be higher than you assumed.
This topic confused most respondents. Most (61%) didn’t know how much debt they could be managing and still qualify for a home loan, while many others said the limit was 40%. However, you may qualify with up to 50% of your monthly income used to pay current debts.
While most homebuyers do their initial mortgage shopping online, less than half contact a local lender for home financing information. There’s no substitute for assistance from a licensed local loan officer who knows the Hawaiian housing market, so why not contact Compass Home Loans today
? We promise you’ll enjoy the best of both worlds: personalized service and a digital mortgage experience.
* Compass Home Loans is an FHA Approved Lending Institution, and is not acting on behalf of or at the direction of HUD/FHA or the Federal government.
* Mortgage insurance may be required on loans greater than 80% loan to value and will increase your monthly payment.
Jul 31, 2019