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What It takes to Get a Mortgage

Online loan marketplace LendingTree has released some new data showing what level of credit score…

  • January 19, 2019

Online loan marketplace LendingTree has released some new data showing what level of credit score you need to have to qualify for the best deals on mortgages. This is especially relevant now that interest rates are rising.

The data comes from LendingTree’s monthly Mortgage Offers Report, which analyzes data from actual loan terms offered to borrowers on LendingTree.com by lenders on LendingTree’s network.

December’s best mortgage offers for borrowers with the best profiles had an average APR of 4.35% for conforming 30-year, fixed-rate purchase loans, down from 4.66% in November.

The APR on refinance loan offers also decreased from 4.63% in November to 4.34%. We consider people with the best credit profiles to be those in the 95th percentile of borrowers who received the best mortgage offers through the LendingTree marketplace, which allows users to compare offers from multiple mortgage lenders.

Mortgage rates vary depending upon parameters including credit score, loan-to-value ratio, income and property type.

For the average borrower, the purchase APR for conforming 30-year, fixed-rate purchase loans offered on LendingTree’s platform was 5.17%, down 18 basis points from November.

The loan note rate of 5.05% was down 19 basis points from November. We prefer to emphasize the APR as lenders often make changes to other fees in response to changing interest rates.

Consumers with the highest credit scores (760+, representing the 65th percentile of borrowers) received an average APR of 4.98%, versus 5.33% for consumers with scores of 680 to 719.

The APR spread of 65 basis points between these score ranges is higher than it was in November. For the average purchase loan amount of $224,609, the spread represents over $17,000 in additional costs for borrowers with lower credit scores over 30 years. The additional costs result from higher interest rates, larger fees or a combination of the two.

For the average borrower, the APR for conforming 30-year, fixed-rate refinance loans decreased 24 basis points from November to 5.09%.

At 4.93% and 5.21%, respectively, the spread between credit score brackets (760+ and 680-719) was 28 basis points. That amounts to nearly $13,000 in extra costs over the life of the loan for borrowers with lower credit scores, given an average refinance loan of $239,329.

Average proposed purchase down payments fell to $54,217, a decline of nearly $6,000.

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