By YOUNG MONEY Staff
28 September 2010

Mortgage rates are near all-time lows - great news for young people looking to buy their first homes, right?

Not so fast.

According to a report released this week by real estate research site Zillow.com, would-be borrowers with less-than-stellar credit scores may be stymied if they try to apply for a home loan. Zillow, which has a mortgage-application portal called the Mortgage Marketplace, found that people with FICO scores of 620 or less did not qualify for the loans available on the marketplace.

And the lowest rates - the ones reported by the media - are generally only available to the 47 percent of people with FICO scores of 720 or above. Scores higher than 720 are deemed "excellent."

Young people who don't qualify for the lowest mortgage rates may still benefit from applying. Rates are so low that even a higher rate may be quite affordable, by historical standards - and loan programs like the one sponsored by the Federal Housing Administration can help first-time buyers get a loan with very little money down.

Still, a young homebuyer shouldn't expect to get the best rates out there - especially if he has a spotty credit history.