How does a borrower's credit score impact their mortgage options?

A higher credit score generally leads to better loan terms and lower interest rates because lenders use credit scores to assess the risk associated with lending to a borrower. Borrowers with higher credit scores are perceived as more likely to repay their debts on time, which makes them more attractive to lenders. This often results in more favorable loan conditions, including lower interest rates, reduced fees, and the potential for larger loan amounts. In contrast, lower credit scores typically indicate higher risk for lenders, often resulting in higher interest rates and less favorable loan terms, thereby limiting a borrower's financing options. The significance of credit scores in determining mortgage options cannot be understated, as they play a crucial role in both the approval process and the terms that borrowers will receive.