640 Credit Score Mortgage Rate: What Interest Rates Can You Get?


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Your credit score is one of the most important factors in getting a mortgage.

Each mortgage program has its own minimum creditworthiness requirements. The credit scores range from 300 to 850, but with a 640 credit score you would meet the minimum requirements under the major mortgage programs.

However, there are steps you can take to improve your credit score and potentially get better interest rates.

Here’s what you need to know about credit scores of 640 or higher:

How Good Is a Credit Score of 640?

Lenders tend to group themselves together Credit scores in areas. On a scale from 300 to 850, a credit score of 640 falls into the “fair” range.

Here are just some of the benefits of having a 640 credit score:

  • You can qualify for the loan. For most conventional and federally insured mortgage programs, a credit score of 640 meets or exceeds the minimum requirements.
  • You may get a cheap interest rate. Because you have fair credit, lenders are more likely to offer you a good interest rate than people with a bad credit score range.

Learn more: What is a Mortgage Rate and How Do They Work?

Average mortgage rates for a credit score of 640

Credit scores are based on the information in your credit reports. These results measure how well you’ve managed your debt in the past and help lenders predict whether you will pay back a loan as agreed in the future.

With a strong credit rating, you can qualify for one Mortgage loan and get a better interest rate.

The following table shows a sample of our partner lender interest rates. You can enter your financial information and select a credit score range from Fair to see what mortgage rates are available to you in your area.

The rates in this table show one annual percentage rate (APR), which contains the interest rate on the loan plus any fees and additional costs charged by the lender.

The APR is a good measure for comparing mortgage offers because it reflects the total cost of borrowing. If you qualify for a lower APR, you can save thousands of dollars over the life of the loan.

For example: If you take out a 30-year mortgage of $ 200,000 at 3.698% APR (assuming you lower 20%), your monthly premium and interest payment will be $ 920.

On the other hand, someone with a credit score of 620 could get an APR of 4.244%. Your monthly payment would be $ 983, which is a difference of $ 63 per month or $ 22,680 over the life of the loan.

While you should focus on keeping your credit score as high as possible, you don’t have to be perfect. Improve your credit score With just a few points, you could move onto the next credit score area and get access to better rates.

Enter your credit information to calculate how much you could pay

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Other factors behind your mortgage rate

Good credit can result in lower interest rates, but is not the only factor in a lender’s offer. Lenders consider broader economic and personal financial factors when determining the terms of a mortgage loan:

Major economic factors Personal economic factors
  • Strength of the economy
  • Inflation rates
  • employment
  • Consumer spending
  • Housing construction and other market conditions
  • Stock and bond markets
  • 10 year treasury returns
  • Federal Reserve Policy
  • Credit score
  • Credit history
  • Down payment size
  • Loan-to-Value Ratio
  • Loan size, type and term
  • Debt-Income Ratio
  • Location of the property

You have some control over some of these factors:

  • Deposit: If your deposit is at least 20% of the home purchase price, avoid paying private mortgage insurance (PMI) on a traditional loan. You are also more likely to get a better interest rate.
  • Loan size: A smaller mortgage carries less risk for the lender. So borrowing less money can improve your chances of getting a good interest rate. Take this into account when setting your household budget.
  • Loan period: Most homebuyers choose a loan term of 15 or 30 years. Generally, the shorter loan term comes with a lower interest rate because the lender takes less risk.
  • Debt-Income Ratio: Lenders use your Debt-Income Ratio to measure how much of your income is being used on debt payments each month. Most lenders require homebuyers to have a DTI rate of 45% or less, although a lower rate increases your chances of getting a low interest rate.

Comparing the interest rates of different lenders is one way to find a cheap interest rate. Credibility makes it easy to compare the interest rates on conventional loans from multiple lenders. You can see prequalified rates from all of our partner lenders, and the process can be completed in full online.

Credibility makes it easy to get a mortgage
  • Immediate optimized pre-approval: It only takes 3 minutes to see if you qualify for an instantly streamlined Pre-Approval Letter without impacting your bankroll.
  • We keep your data private: Compare prices from multiple lenders without selling your details or sending spam.
  • A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Only speak to a loan officer if you want to.

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Home loan options for a credit score of 640

Borrowers with a credit score of at least 640 can qualify for federally insured home loans in addition to traditional mortgages. Here are your main options:

FHA loan

FHA loan are supported by the federal housing administration – and due to the low credit and down payment requirements, these loans are popular with first-time buyers and borrowers with low credit scores.

If your credit score is at least 580, you may qualify for the loan and be able to wager as little as 3.5%. Borrowers with credit scores in the 500 to 579 range can qualify as long as they stake at least 10%.

  • Advantages: You can also qualify with bad credit.
  • Disadvantage: Most FHA loans come with mortgage insurance, both as an upfront premium and monthly expense that goes into the mortgage payment.

VA loan

If you are a military veteran, active duty member, or eligible surviving spouse, you may qualify for a loan that is supported by the U.S. Department of Veterans Affairs.

Instead of paying a down payment, borrowers pay a financing fee of between 1.4% and 3.6% of the home purchase price.

The VA does not set a minimum credit value to qualify for this type of home loan, although lenders may set their own requirements.

  • Advantages: There is no need to pay a deposit or mortgage insurance.
  • Disadvantage: VA loans are available only to eligible service members, veterans, and surviving spouses.

USDA loan

USDA loans come in two forms: direct and guaranteed. Direct loans are funded by the U.S. Department of Agriculture, while guaranteed loans are offered by private lenders and secured by the USDA.

To qualify for a USDA loan, you must buy or build a home in a suitable rural area. The minimum loan value is 620, although most lenders set their requirements at 640.

  • Advantages: You can qualify with a credit score of only 620.
  • Disadvantage: You need to meet income requirements and buy or build a home in an appropriate rural area.

Conventional Loans

Conventional Loans are not supported by government agencies; Instead, the lender usually sells the loan to Fannie Mae or Freddie Mac.

To qualify for any of these home loans, you usually need a credit score of at least 620 and must wager at least 3%.

  • Advantages: You can avoid Mortgage insurance if you bet at least 20%. Even if you have to pay PMI at the beginning of your repayment term, you may be able to remove these costs once your credit-to-value ratio reaches at least 80%.
  • Disadvantage: The minimum credit requirement is one of the highest on this list.

How To Increase Your Credit Score

A higher credit score can help you qualify for a home loan and a lower interest rate, potentially saving you thousands of dollars over the life of the loan.

When you’ve been Monitoring your credit and found that it takes some work, here are some ways to improve your credit scores:

  • Become an authorized user on a friend or family member’s credit card account.
  • Pay off some or all of your debts.
  • Set monthly reminders so you never forget to schedule a payment.
  • Only open credit accounts that you need.
  • If some of your accounts have defaulted or you’re not sure where to start, contact a credit counselor.

Continue reading: How Your Credit Score Affects Mortgage Rates

About the author

Kim Porter

Kim Porter is an expert on credit, mortgage, student loan, and debt management. It has been featured in US News & World Report, Reviewed.com, Bankrate, Credit Karma, and others.

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