Part of the American Dream is having the opportunity to own your own home! Unfortunately, some people believe that they don’t qualify to buy based on what they have seen in commercials or have heard from their friends; They believe that in order to buy, they need a FICO score of 800 or higher (which is the key number that we see in many commercials).
The reality, however, is that you don’t need a credit score of 800 or higher to buy! In 2016, the typical credit score of a homebuyer was 728, and among Hispanic homebuyers the average score was 701. Ellie Mae, in their November 2016 Origination Insight Report (last numbers reported), went into more detail about homebuyer’s FICO scores.
Here is the average FICO score distribution for all purchases according to Ellie Mae:
- 500 to 549: 0.02%
- 550 to 599: 0.41%
- 600 to 649: 8.56%
- 650 to 699: 21.29%
- 700 to 749: 24.58%
- 750 to 799: 32.19%
- 800+: 12.95%
As you can see, 86.62% of homebuyers had a score between 600 and 799.
Here are the average FICO scores for all closed loans by loan type:
- All loans: 728
- Conventional: 753
- FHA: 686
- VA: 709
Don’t disqualify yourself from the opportunity to buy. Sit down with a real estate professional who can help you see your opportunities, and if you are not ready, let them help you to create a plan so that you can become a homeowner as soon as possible!