I was visiting with a couple who’s goal is to buy a home soon.
I found it interesting the lack of and miss-information that had been provided by the lenders they were talking with about this.
DIFFERENT SCORING MODELS
The interest rate you will be offered will be based on the lower of the two mid-scores from the mortgage lenders source for the credit reports. These scores tend to be 20-25 points lower than the FICO scores available from Equifax. And 40-50 points lower than those obtained from systems using the VantageScore 3.0 model (e.g., CreditKarma, and TransUnion).
The magic number for qualifying is 43%. This is based on your gross incomes and represents the maximum debt service (debt to income ratio) a loan can be funded. Here is a simple table to illustrate this concept:
You can find a functional copy of this spreadsheet at this link.
If you find this information useful, or if you would like to discuss this and how your credit score can be improved in advance of putting in your application, I would love to hear from you!
Your Credit Improvement Specialists
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