Connecticut Select Homes | Fairfield County CT Real Estate

Many people are wondering what the criteria is for purchasing or refinancing a home in our current real estate market conditions. As long as your income and assets are verifiable and you have a decent credit score you should have no problem obtaining a mortgage.

First, let’s look at your credit score. A FICO score of at least 620 is ideal for most private loans. If you are trying to qualify for a Fannie Mae or Freddie Mac loan you will need to have at least a 680. If your credit score doesn’t fit these standards, not to worry, you may still qualify, however at a higher interest rate. You can find out your FICO score at www.MyFICO.com.

Second, your income/employment will be put under the microscope. Ideally, banks are looking for at least two years of employment in the same line of work. Usually, you can provide a few recent consecutive paycheck stubs to verify employment and 2 years of tax returns if you are self-employed. Tax returns may also be requested even if you are not self-employed.

Third, your assets/collateral will be analyzed. The main collateral is the house you are about to purchase or refinance. An appraisal will be done to determine the home’s market value. Also, you will need to provide two months of bank and/or brokerage statements to verify your down payment. If you plan on using your 401k, note that banks will only use 70% of the amount in your account. In addition to your down payment you will need to show reserves to pay your mortgage in case of job loss/illness. Generally the reserve amount needed is between 2-3 months.

Don’t worry if you don’t fit all the above criteria perfectly. Contact a Mortgage Broker and talk with them about your situation. Often they can help you find a product that fits your personal criteria or put you on the right track, so that you can qualify in the future.

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