He qualifies for an 80 percent LTV on the same house, which allows him to borrow $160,000. On the other hand, David has lower credit scores. He qualifies for a 95 percent LTV on a $200,000 house, meaning he can borrow $190,000. An example: Peter has higher credit scores.Usually, if you have higher credit scores, you can qualify for a higher LTV. The LTV is the percentage of the home's appraised value you can borrow. You may see the amount of money you can qualify for called the loan-to-value ratio or LTV. Generally, the lowest interest rates are offered to the lowest-risk consumers, or those deemed most likely to pay a loan back as agreed. Your credit scores and other factors, such as your income, can help determine the amount of money you’ll qualify for, as well as the interest rate you may pay. Like other lenders and creditors, mortgage lenders may evaluate your credit scores – along with other factors – to assess the likelihood you will pay the loan back as agreed.
Credit scores can affect how much money you can borrow for a given property. From the amount of money you can borrow, to whether you qualify for the best loan terms, credit scores can impact at least four aspects of home buying.īefore you fall in love with a house out of your price range, you need to know what you can afford. But it’s important to know how your credit scores may affect the home buying process. You may also have to pay higher premiums for private mortgage insurance (PMI)īuying a home can be an exciting step in your life.Lower credit scores may mean you are offered higher mortgage interest rates.There are four areas credit scores may affect the home-buying process.When it comes to buying a home, your credit scores can play a big role.
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