Your Credit Score & Home Buying Power

It's important to know how your credit score will affect your home buying power.

Interest Rates

Consider this scenario to highlight how your credit score impacts your interest rate and ultimately your buying power.

Scenario: Your goal is to have a payment of $1,800/month (principal and interest only). You have enough saved for a 5% down payment and want a term of 30 years. Based on these rates, this is the maximum purchase price you can afford:

Credit Score of 780, rate of 5.750% (APR^* 6.006%) - a purchase price of $325,000
Credit Score of 720, rate of 6.000% (APR 6.262%) - a purchase price of $315,000
Credit Score of 680, rate of 6.375% (APR 6.645%) - a purchase price of $305,000
Credit Score of 640, rate of 7.000% (APR 7.286%) - a purchase price of $285,000

You can see that the lower your score is, the less of a home you can purchase. There may be some other options for you to consider if your score is lower that wouldn’t impact your buying power as much. You and your loan officer will review all of your options and let you make the best decision for your situation.

Monthly Payments

The following scenarios illustrate how your credit score impacts your interest rate and monthly payments.

For each scenario, the purchase price of the home is $300,000 with a minimum down payment required.

Scenario 1: A Credit Score of 740:

Scenario 2: A Credit Score of 680:

A conventional loan may or may not be the best choice for everyone. There are additional loan programs your loan officer will discuss with you to help determine the best fit for your particular goals. We want to set you up for success and will make sure the product you choose is the right option for your individual situation.

*APR=Annual Percentage Rate. Rates are subject to change daily

Source: cuna.org