Can I Get a Mortgage With a 700 Credit Score?

A 700 credit score is a strong foundation for securing a mortgage. Lenders undertake a comprehensive review of an applicant’s entire financial profile. While a favorable score can lead to more advantageous loan terms, other financial aspects also play a significant part in the lender’s final decision.

The Role of Credit Score in Mortgage Lending

A credit score numerically represents a borrower’s creditworthiness and perceived risk. A higher score indicates a lower likelihood of default and responsible financial behavior. Lenders utilize credit scores extensively, setting specific thresholds for mortgage products. A 700 FICO Score is considered “good” (670-739 range).

A 700 credit score generally positions a borrower favorably, often exceeding minimum requirements. Conventional loans typically require a 620 minimum, but 720 or higher can yield better rates. This strong score can positively influence interest rates and loan terms, making a mortgage more affordable. FICO and VantageScore are common credit scoring models used in mortgage lending. While a 700 score signals reliability, it is one component within a broader financial evaluation.

Key Financial Factors Beyond Credit Score

Beyond your credit score, lenders scrutinize financial factors to determine repayment capacity. Income and employment history are primary considerations for a stable income stream. Lenders consider salary, hourly wages, and verifiable self-employment income. Documentation like recent pay stubs, W-2 forms (past two years), and federal tax returns for self-employed individuals are typically required. Employment verification letters may also be requested to confirm job stability.

Your Debt-to-Income (DTI) ratio measures the percentage of your gross monthly income dedicated to debt payments. Lenders generally prefer a DTI ratio of no more than 36%, though some may approve loans with a DTI up to 45% or even 50% for certain loan types like FHA loans. This calculation includes various debts such as credit card minimums, student loan payments, car loan payments, and existing mortgage payments. The DTI ratio provides insight into your ability to manage additional housing expenses alongside your current financial obligations.

Down payment and available assets hold significant weight. A larger down payment can reduce the loan amount, leading to better interest rates and less lender risk. Conventional loans with less than 20% down typically require private mortgage insurance (PMI). Lenders require asset documentation, including recent bank statements, investment account statements, and gift letters for gifted funds.

Lenders evaluate financial reserves (funds available after mortgage closing). These reserves demonstrate financial stability and ability to manage unforeseen expenses or temporary income disruptions. Having several months’ worth of mortgage payments in reserve is viewed favorably. Property-related factors, such as type and intended occupancy (e.g., primary residence versus investment property), can influence a lender’s decision and available loan programs.

Understanding Mortgage Options

A 700 credit score provides access to a wide range of mortgage options, each with distinct characteristics.

Conventional Loans

Conventional loans are common and not government-insured. They generally require a 620+ credit score, making 700 sufficient. Less than 20% down typically requires private mortgage insurance (PMI).

FHA Loans

FHA loans, insured by the Federal Housing Administration, make homeownership accessible with lower credit score requirements than conventional loans. While a 580 FICO score can qualify for 3.5% down, a 700 score strengthens an FHA application. FHA loans include mortgage insurance premiums (MIP), with both upfront and annual premiums.

VA Loans

VA loans are for eligible veterans, active-duty service members, and surviving spouses. They often require no down payment. While the Department of Veterans Affairs does not set a minimum credit score, most lenders look for at least 620, making 700 advantageous for favorable terms. VA loans include a funding fee (0.5% to 3.3% of loan amount), depending on down payment and prior VA loan use.

USDA Loans

USDA loans, backed by the U.S. Department of Agriculture, are for eligible rural properties and offer no down payment. They target low- to moderate-income borrowers. While USDA has no official minimum score, lenders prefer at least 640 for automated approval. USDA loans have area-based income limits. A 700 credit score benefits competitive rates and terms across these programs.

The Mortgage Application and Approval Process

The mortgage application begins with pre-approval, providing an estimated loan amount. This involves a soft credit pull and preliminary financial review. Pre-approval helps understand borrowing capacity and shows sellers you are a serious buyer.

After pre-approval, select a lender (banks, credit unions, online lenders, or brokers). After finding a property, submit your application package (online, in person, or mail). This includes all financial documentation.

Underwriting involves the lender’s underwriter verifying all provided information and documents. This includes assessing income, assets, credit history, and property details. The underwriter assesses lending risk and ensures guidelines are met. They may request additional information or clarification.

A property appraisal confirms the home’s market value, aligning with the loan amount. A home inspection assesses property condition, often for the buyer’s benefit. These steps ensure the property meets lender standards for collateral.

After underwriting, the loan moves to approval. You receive a Closing Disclosure, outlining final mortgage terms, fees, and costs. Lenders must provide this document at least three business days before closing, allowing time for review and comparison. Closing is the final stage, where legal documents are signed, funds transferred, and you receive keys.