Lowest Credit Score to Qualify for a Mortgage

During the height of the housing bubble in the 2000s, some borrowers could acquire a mortgage even with a score of 476---close to the minimum of 350 on the FICO score range, according to the Washington Post. In 2011, you probably need much better than a 476 to get an affordable mortgage, although some creditors still specialize in the demographic of customers with very low scores.

Identification

Lenders that cater to borrowers with low scores are called "sub-prime" lenders. Even this class of creditors probably won't lend to anybody with a score of less than 500 to 520, according to Bankrate. Usually, you must have a cosigner when your score dips below 550. It is not until you reach the 620s and above that you can probably get a mortgage on your own.

Considerations

In 2011, scores of 730 and above usually get the best annual percent yield and approval rates. Anything less and getting a mortgage is not a guarantee. Even for the government's Federal Housing Administration loans, which generally have more lax standards than the private sector, the average borrower has a score of 690, according to U.S. News and World Report.

The Down Payment

You can almost always make up for a poor credit score by increasing the size of your down payment. Mortgage providers typically require at least 3.5 percent down for all borrowers, but you if you increase this to 20 percent, your chances of getting approved would go up. Alternatively, you could use a down payment to lower your rate if you have okay credit.

Tip

Check your credit reports from AnnualCreditReport.com several months before applying for a mortgage so have enough time to fix any mistakes and take steps to pay down debt. Also, calculate your debt-to-income ratio---add your monthly debt payments from your credit report and divide by your monthly income. Lenders like to see a DTI lower than 36 percent. If you can knock off a significant portion of your debt and get a raise before applying for a mortgage, you might overcome a less-than-stellar credit score.