Search to Sold! with Matthew "MG" Garcia | Money Talks. But First, It Yells at Your Credit Score.

Welcome back! So, you’ve decided to buy a house—fantastic. But before you start picking out paint colors, we need to talk about your finances. Specifically: your credit score. Think of it as your financial report card, and your lender is the teacher grading it.

Here’s what you need to know before you get pre-approved for a mortgage.

Understanding Your Credit Score

Your credit score is a three-digit number between 300 and 850 that tells lenders how risky it might be to lend you money. The higher your score, the better your chances of securing a favorable mortgage rate.

Credit Score Requirements by Loan Type

These are general guidelines (always talk with a lender for the most current details):

• Conventional loans: Usually require a minimum score of 620. A score of 740 or higher can unlock better interest rates and lower down payments.

• FHA loans: More flexible. A score of 580+ qualifies you for a 3.5% down payment. Scores between 500–579 may still qualify, but require 10% down.

Debt-to-Income Ratio (DTI)

Lenders don’t just look at your credit—they look at how much debt you carry compared to your income.

• DTI = your monthly debts ÷ your gross monthly income

• Ideal ratio: 36% or lower (though some lenders allow higher with compensating factors).

A good lender will review this with you and map out a plan—many even do these consultations for free.

Pre-Qualified vs. Pre-Approved vs. Underwritten

Not all letters carry the same weight when you’re making an offer.

• Pre-Qualified: Based on what you tell a lender. No verification. Sellers don’t take it seriously.

• Pre-Approved: Verified with credit pull, income, and asset documentation. Stronger. A must in today’s market.

• Underwritten Approval: The gold standard. Your loan file has already gone through the full underwriting review. At this stage, you’re just waiting for a property to attach the loan to. This makes your offer even more competitive.

💡 Hard Credit Pulls: Yes, pre-approval involves a hard credit pull. But don’t panic—FICO guidelines allow multiple mortgage inquiries within a 14–45 day window (depending on the scoring model) to count as one inquiry. Best practice: do your shopping within two weeks.

What Lenders Will Review

For pre-approval, expect to provide:

• Proof of income (pay stubs, W2s, tax returns)

• Employment verification (two-year history, including school if applicable)

• Asset statements (bank accounts, savings, etc.)

• Credit history

Your pre-approval letter will usually be valid 30–90 days. Many lenders can update it if your home search takes longer.

Tips to Strengthen Your Financial Standing

Want to look even better to lenders? Start with these moves:

• Check your credit report for errors and dispute anything inaccurate.

• Pay down existing debts to lower your credit utilization ratio.

• Avoid opening new credit lines.

• Keep saving for your down payment—the more you can put down, the better terms you’ll likely get.

Final Thoughts

Buying a home isn’t just about finding the right house—it starts with showing the bank you’re ready. By understanding your credit score, DTI, and the difference between pre-qualified, pre-approved, and underwritten, you’ll be in a much stronger position when it’s time to make an offer.

Next up: defining your home buying criteria (a.k.a. separating the must-haves from the nice-to-haves).

Disclaimer
This blog post was created using a combination of personal insights, publicly available real estate resources, and AI writing assistance via ChatGPT by OpenAI. While every effort has been made to ensure accuracy and relevance, the information provided is intended for educational and informational purposes only and should not be considered legal, financial, or professional advice.

Readers are encouraged to consult with licensed professionals before making any real estate decisions. Turn Keys With MG, Matthew Garcia DRE# 02251181, and Real Brokerage Technologies assume no liability or responsibility for actions taken based on the content of this blog. Always verify any legal or regulatory advice with appropriate authorities or qualified professionals.