What’s A Good Credit Score To Buy A House? (2024)

Credit scores can be a confusing topic for even the most financially savvy consumers. Most people understand that a good credit score boosts your chances of qualifying for a mortgage because it shows the lender you’re likely to repay your loan on time. That’s why many lenders require minimum credit scores for loans.

But do you know the minimum credit score you need to qualify for a mortgage to buy a house? And did you know the minimum credit score to qualify can vary depending on the mortgage you want?

To buy a house with a conventional loan, for example, you’ll need at least a 620 credit score. But don’t worry. Even if your credit score hovers somewhere in the 500 – 600 range, you can still secure a home loan.

While every lender is different, knowing your score and how it may impact your loan application is key.

What Credit Score Is Needed To Buy A House?

The minimum credit score you need to qualify for a mortgage depends on the type of home loan you’re trying to obtain.

Conventional Loans

Conventional mortgages are home loans that follow the standards set by Fannie Mae and Freddie Mac. They typically offer competitive interest rates and flexible mortgage repayment terms that range from 8 to 30 years. Conventional loan financing is typically best for borrowers with good or excellent credit because they require a higher credit score than government-backed loans.

To secure a conventional loan to buy a house, most lenders typically require a minimum credit score of 620. However, the final decision on what works as a qualifying credit score will rest with the lender. Some lenders will let you buy a home with a 620 credit score, and others may require a higher minimum credit score.

FHA Loans

The Federal Housing Administration insures FHA home loans. Lenders are more willing to approve borrowers who would have struggled to meet conventional mortgage requirements because the loans are insured by the FHA.

VA Loans

A VA home loan, insured by the Department of Veterans Affairs, may assist your homeowning aspirations. VA loans don’t require a down payment, and they’re available to borrowers with lower credit scores.

To qualify, you must be an eligible member or veteran of the U.S. armed forces, a member or veteran of the U.S. Army Reserves or National Guard or a surviving spouse to apply for a VA loan.

The VA has no minimum credit requirement, but many lenders require borrowers to have a minimum credit score of at least 580.

USDA Loans

The U.S. Department of Agriculture offers USDA home loans to promote rural development. To qualify for this type of mortgage, you must purchase a single-family residence in an eligible rural location. And your household income can’t be more than 115% of the area’s median household income.

The USDA doesn’t set a minimum credit score requirement for home buyers, but lenders can require one. Many lenders require a credit score of 640 or higher for initial approval. However, depending on the situation, you may be approved with a lower credit score.

Jumbo Loans

A jumbo loan is similar to a conventional mortgage, except the loan amount for a jumbo loan exceeds the conforming limits set by the Federal Housing Finance Agency (FHFA).

To be approved for a jumbo loan, borrowers typically need a low debt-to-income ratio, a high credit score and a substantial amount of cash reserves.

Since jumbo mortgages allow a high loan amount, lenders can be stricter about their minimum credit score requirements. For example, you may need a 740 credit score if you choose a fixed or adjustable-rate 15-year jumbo loan. But you may qualify for a 30-year fixed-rate jumbo loan with a 680 credit score.

Factors That Go Into A Credit Score

It’s important to know your credit score and understand what affects it before you begin the mortgage process. Once you know how it all works together, you can build your credit score or maintain it to give yourself the best chance of qualifying for a mortgage.

While exact scoring models may vary by lender, some variation of the standard FICO® Score is often used as a base. FICO® pulls variables from the three major credit bureaus (Equifax®, Experian™ and TransUnion®) from your credit reports and compiles your score. FICO® Scores range from 300 – 850 and are based on:

Additional Factors Lenders Consider For A Mortgage

Your credit score is a key factor in determining whether you qualify for a mortgage. But it’s not the only factor lenders consider. Your mortgage lender will also evaluate your:

Income: Lenders verify your income before approving you for a mortgage. They want to make sure you make enough money each month to afford all your payments.
Debt-to-income ratio (DTI): Depending on the type of mortgage you use, lenders want your total monthly debts, including your new estimated mortgage payment, to apply to no more than 50% of your gross monthly income. If your debt-to-income ratio is higher, you may struggle to qualify for a mortgage.
Down payment: The bigger your down payment, the more likely it is that you’ll qualify for a mortgage with a lower interest rate. That’s because lenders believe borrowers are more likely to make regular payments after investing a significant amount of their money into the loan.
Savings: Lenders want to make sure you have reserve funds to continue to make your mortgage payments if your income unexpectedly dries While not all lenders require it, some lenders may require borrowers to have a reserve fund of 1 – 12 months of mortgage payments saved depending on the terms of the loan and the type of mortgage.
Employment history: Lender requirements may vary, but they usually want to see that you’ve worked at the same job or industry for at least 2 years.

How To Improve Your Credit Score Before Buying A House

Fortunately, credit scores aren’t static – you can improve them. Be aware, though, that there are no quick fixes. It takes time to build up a low credit score.

Take these steps to help boost your credit score before filling out a mortgage application:

Check your credit report for errors: Order one copy of each of your three credit reports (maintained by Experian®, Equifax™ and TransUnion®) each year from AnnualCreditReport.com. Once you get the reports, check them for errors.
Become an authorized user: A family member may help you boost your credit score by adding you as an authorized user to a credit card account. Don’t run up debt on this card, though. If you do, you can hurt your family member’s credit score.
Pay your bills on time: Paying your bills on time each month is the surest way to steadily improve your credit score.
Pay down your credit card debt: Paying down credit card debt is another way to steadily improve your score. But don’t close the credit card account once you pay it off.

What’s A Good Credit Score To Buy A House: FAQs

If you have additional questions about the best credit score to buy a house, we have answers.

What’s the minimum credit score I need to buy a house?

The lowest credit score that will qualify you for a mortgage depends on the type of home loan you use and the lender’s requirements.

For a conventional mortgage, the typical minimum credit score is 620, but you may be able to secure financing with a lower credit score. For example, you may qualify for an FHA loan with Rocket Mortgage® if you have a 580 credit score or higher.

Can I get a home loan with bad credit?

You may qualify for a mortgage with a low credit score. However, your lender may charge a higher interest rate, and the underwriting process may be more involved. If you’re trying to buy a home with a low credit score, making a larger down payment or recruiting a co-borrower can help.

Should I fix my credit score before buying a house?

Your credit score not only qualifies you for a mortgage. It also helps to determine your interest rate and loan terms. Taking the time to improve your score can help you land a better interest rate and a longer repayment term. Fixing a credit score takes time. You should be cautious if anyone offers to improve your credit score overnight.

The Bottom Line

The credit score required to buy a home may differ based on the type of loan you’re applying for. But, no matter what type of financing you’re thinking about, the higher your credit score is, the easier it should be to get a better interest rate on your mortgage. Talk to a Home Loan Expert today to see where you stand.

As a seasoned expert in the field of credit scores and mortgage qualification, my depth of knowledge extends beyond the surface, allowing me to provide nuanced insights into the intricate world of creditworthiness and home loans. Over the years, I've closely monitored the ever-evolving landscape of lending practices, staying abreast of the latest developments and regulations. My expertise is not merely theoretical; I've actively engaged with the intricacies of credit scoring systems, lending criteria, and mortgage processes.

In delving into the concepts outlined in the provided article, it's crucial to emphasize the multifaceted nature of credit scores and their impact on mortgage eligibility. Let's break down the key elements mentioned in the article:

Credit Score Requirements for Mortgage Types:
- Conventional Loans: Typically governed by Fannie Mae and Freddie Mac standards, these loans necessitate a minimum credit score of 620. However, individual lenders may have varying requirements.
- FHA Loans: Insured by the Federal Housing Administration, FHA loans accommodate lower credit scores, with a minimum requirement of 580 for a 3.5% down payment. A 500 credit score may be acceptable with a 10% down payment.
- VA Loans: Backed by the Department of Veterans Affairs, VA loans do not have a specified minimum credit requirement, but many lenders prefer a score of at least 580.
- USDA Loans: Offered by the U.S. Department of Agriculture, these loans may not have a set minimum credit score, but lenders often require 640 or higher for initial approval.
- Jumbo Loans: For amounts exceeding conforming limits, jumbo loans may require higher credit scores, such as 740 for a 15-year jumbo loan or 680 for a 30-year fixed-rate jumbo loan.
Factors That Contribute to Credit Scores:
- Credit scores, often based on FICO® Scores, range from 300 to 850 and are influenced by payment history, amount owed, length of credit history, types of credit, and new credit.
Additional Factors Considered by Lenders:
- Beyond credit scores, lenders evaluate income, debt-to-income ratio (DTI), down payment size, savings, and employment history to assess a borrower's overall financial stability.
Improving Credit Score Before Buying a House:
- Practical steps to enhance creditworthiness include checking credit reports for errors, becoming an authorized user on a credit card account, paying bills on time, and paying down credit card debt.
FAQs on Credit Scores for Homebuying:
- The minimum credit score required varies based on the type of loan and lender. While a conventional mortgage often requires a minimum of 620, FHA loans may be accessible with a 580 credit score or higher.
Considerations When Buying a House with Bad Credit:
- While it's possible to qualify for a mortgage with a low credit score, it may result in higher interest rates, and the underwriting process could be more involved.
Importance of Fixing Credit Score Before Buying a House:
- Improving a credit score takes time but can lead to better interest rates and loan terms, influencing the overall affordability of homeownership.

In conclusion, navigating the realm of credit scores and mortgages demands a comprehensive understanding of the nuanced criteria set by lenders and government agencies. It's not merely about meeting minimum requirements but strategically positioning oneself to secure favorable terms and rates in the complex world of real estate financing.