That being said, the reality is that there is mortgage money available and most people can get a mortgage today!
An important first step in investing in a home is to be pre-approved with a lender. When you call a lender to find out how much home you can afford you are initially pre-qualified. Pre-approval often goes a step further with credit scores being pulled. Usually a pre-approval or pre-qualification will be conditioned on verification of information.
You might be qualified for a $150,000 mortgage but don’t want to incur that much debt. Often a seller will not consider an offer unless that potential buyer can show they are capable of obtaining a mortgage for the home.
The buyer is protected by a mortgage contingency within the agreement of sale. This contingency basically states the buyer must obtain a mortgage of a stated amount and type (conventional, FHA, etc.) and within an interest range – usually a one percentage spread. Decisions regarding approval for mortgage are based on credit scores as well as debt to income. Credit scores are important for sure. The lower the score the higher the interest rate being offered. Credit scores range from 300 to 850. With traditional financing a score as low as 620 can still get 100 percent financing. For example, FHA will give a mortgage to a low 500 score with good employment history and documentation as to why the score is low.