You may think that having a credit score of at least 700 and a down payment of almost 5 percent will help you buy a home in this home buying environment. But lenders have tightened credit requirements for obtaining a mortgage when you're buying a home.
You may still be able to get an affordable mortgage through the FHA, which has lower down payment requirements, or that you're better off waiting until you have improved your credit score and saved more money for a down payment.
For the most part, your best loan option might be an FHA loan because of the size of down payment you want to put into the purchase. As for most other loan products, you may find it difficult to secure a low down payment loan.
FHA loans require just 3.5 percent in cash for a down payment. On a $160,000 home purchase, you'd have to put down at least $5,600, but you'd have to be able to afford the payments. On a 30-year fixed rate mortgage at 5 percent, your monthly payments would be about $840 plus real estate taxes and insurance.
While 700 is a good FICO score, it's not a great credit score. Some lenders are now looking for borrowers to have at least a 72o FICO score to get the best rates.
If you decide to pursue buying property now, speak with a mortgage lender to see what options you may have. You may be pleasantly surprised to find that you and your fiancé will qualify for a nice starter home. If not, at least you'll know what you have to do to get ready to buy down the road.
Stop Foreclosure with a Loan Reinstatement
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