Ariel Skelly/Getty Images
Refinancing, such as a purchasing mortgage, has minimal credit score requirements. Specific requirements vary depending on the lender and the refinance required. Read more about the minimum credit score for refinance.
What credit score do I need to refinance my home?
| Loan type | Minimum score |
|---|---|
| Traditional refinance | 620 |
| Refinance Jumbo | Usually over 700 |
| FHA Refinance | 580 |
| VA refinance | There is no minimum credit from VA, but it is usually 620 |
| Refinance USDA | There is no minimum credit from USDA, but it is usually 640 |
| Cash-out refinance | 620 |
These numbers are guidelines, but the credit score you need to refinance depends on the mortgage lender, your individual situation, and often the type of refinance you choose. For example, lenders tend to have more stringent requirements for borrowers who refi cash out for traditional rates and periods.
Also, if other aspects of your financial situation are, for example, a high debt income (DTI) ratio, and other aspects of your financial situation are not that strong, lenders may prefer a higher score.
Traditional refinance credit score
Minimum credit score: 620
Traditional refinances are one of the most common types. Refinancing to a traditional or traditional loan requires at least a 620 credit score. However, that score requires a DTI ratio of 36% or less and may be limited. If you have a higher credit score, the higher the DTI ratio, the more likely you will be to refinance.
Jumbo Refinance Credit Score
Minimum credit score: Usually 700 or more
Jumbo loans are a type of non-conforming loan, so you do not need to comply with the same requirements as compliant loans. However, jumbo loans are so large that you usually need a higher minimum credit score to refinance for one. Often it’s over 700.
FHA Refinance Credit Score
Minimum credit score: 580
You can refinance your FHA loan with a credit score of at least 580. However, if you are eligible for a reasonable refinance with the FHA, you can bypass this requirement completely.
VA Refinance Credit Score
Minimum Credit Score: No requirements from VA, but generally 620
The Veterans Affairs Bureau (VA) does not set minimum credit score requirements for mortgages, including refinancing. However, many lenders require at least 620 to refinance your VA loan.
USDA Refinance Credit Score
Minimum Credit Score: No requirements from USDA, but generally 640
Similar to the VA loan program, USDA loans do not have a minimum credit score requirement. Still, many lenders need at least 640.
Cash Out Refinance Credit Score
Minimum credit score: 620
The minimum credit score you can have with a cash-out refinance is 620. A high score may allow you to get more cash out depending on your existing stock level.
Other factors affecting refinance approval
It is not the only factor that lenders consider when verifying their application for a refinance. Just like when you applied for your original mortgage, the lender will also review you:
- DTI ratio: If you have a strong credit score, there may be more wiggling room to put a higher debt load than ideal. If your credit score is close to 620, you will have less flexibility.
- Loan and Value (LTV) ratio: LTV ratio is a measure of the amount of mortgage you paid. Refinance requires that most lenders have at least 20% capital in your home.
- Income and work history: Lenders prefer to work in the same job, or at least in the same industry, for two years, and show reliable income.
Can I refinance my mortgage because I have poor credit?
It is possible to refinance poor credit on a mortgage, but options are somewhat limited. Here are some programs that will take into consideration whether you want to refinance due to a lower credit score.
FHA streamlines refinance
If you wish to refinance your FHA loan, you can look into a reasonable FHA refinance. However, you will need to pay the mortgage insurance premium. This ensures that refinance will not cancel anything you store.
VA Interest Rate Reduction Refinance Loan (IRRRL)
IRRRL, also known as the refinance of VA Streamline, is a credit check loan available to current VA loan holders. This type of refinance typically does not require you to submit income documents or receive a family evaluation. You will need to pay the VA funding fees and closing costs, but you can get involved in the loan.
USDA streamlined assistance program
If you are a current USDA loan holder who has made payments on time for at least 12 months, you can apply for a refinance through this program. Lenders typically do not require valuation or credit checks, but to qualify, the loan must reduce principal, interest, taxes and homeowner’s insurance (PITI) payments at least $50 a month.
How to improve your credit score for refinancing
Improve your pre-refinance credit score can go a long way in enhancing your application. To do that, you:
- I’ll deal with you Credit usage rate. Focus on paying off your debts to use less than 30% of the available credits. You can also request an increase in your credit limit.
- Pay your bills on time. When preparing to refinance, try to avoid applying for new credits. You can also submit all your refinance applications within a month or so to reduce the impact on your credit.
- Understand your credit score. Check your credit score for free at AnnualCreditreport.com. By monitoring your score, you can significantly correct inaccurate information before you have to apply for a loan that includes a refinance.
