If you’re in the market to become a homebuyer, you may be wondering what credit score is needed to buy a house. While it’s true that you need a credit score above 760 to get the lowest interest rates and best loan terms, you don’t need that score to purchase a home(1). Potential homebuyers with fair credit have plenty of options. Certain homebuying programs are even available for individuals with credit scores below the typical 620 cutoff line, but the loan terms could be unfavorable.
So what does your credit score need to be to buy a house?
Each type of mortgage has different eligibility requirements. Conventional loans have higher credit score requirements, while government-backed loans are more lenient to help lower-income and first-time homebuyers qualify.
In terms of specific numbers, most lenders want to see a minimum score of 620 for conventional mortgages and only 500 to 580 for government-backed FHA, VA and USDA loans. And some lenders may go even lower — if you have strong financials to back up your application.
Here are the typical minimum credit scores for the most popular types of home loans:
| Loan type | Minimum credit score needed to qualify | Typical minimum down payment requirement |
|---|---|---|
| Conventional mortgage | 620 | 3% |
| FHA loan | 580+ to be eligible for maximum financing 500–579 for limited financing(2) | As low as 3.5%(3) |
| USDA loan | None, but most lenders look for a minimum credit score of 620 | None |
| VA loan | None, but most lenders look for a minimum credit score of 620 | None |
| Jumbo loan | Typically 700 or higher | At least 20% |
If you’re wondering what credit score is needed to buy a house with no money down, USDA or VA loans, if you qualify, might be a good option. Keep in mind that you may be able to get around the minimums listed here if the underwriting process allows alternative criteria or you can prove your financial soundness. But remember, the best rates and terms go to borrowers with scores of 760 and up.
Ninety percent of lenders use the FICO Score when making lending decisions. But different loan types use different FICO Score versions.
When applying for a mortgage, a lender likely pulls these three scores(4):
Compare top brands by home loan type, state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.
Your credit score is an important factor a lender considers before deciding whether to approve you for a mortgage. But they also consider your debt-to-income ratio, your savings and how much money you have available to put toward a down payment.
Beyond helping to determine whether you can even get a mortgage, your credit score also plays a large role in the interest rate and payment terms you’re ultimately approved for. If your credit score is well below average — the average FICO score in 2022 was 714 — lenders may factor in risk-based pricing when quoting your mortgage details(5).
To offset the perceived risk of taking on a borrower with a low credit score, a lender may increase the interest rate on a mortgage. It means that a credit score of 650 might get a higher interest rate than a credit score of 720, which could cost you tens of thousands more over the life of your mortgage.
The higher your credit score, the more likely you are to get the lowest rates. To compare, here are the average 30-year fixed mortgage annual percentage rates (APRs) by credit score as of January 9, 2024:
| FICO Score | Average mortgage APR |
|---|---|
| 760-850 (Very good to exceptional) | 6.380% |
| 700-759 (Good to very good) | 6.602% |
| 680-699 (Good) | 6.779% |
| 660-679 (Fair to good) | 6.993% |
| 640-659 (Fair) | 7.423% |
| 620-639 (Fair) | 7.969% |
Source: myFICO
With so much riding on your credit score, it’s essential to check your credit score and full credit report to clean up any errors before applying for a mortgage. You’re entitled to free copies of your credit reports, which you can get weekly from AnnualCreditReport.com.
By getting a copy of your report, you can:
It’s often more challenging to buy a house with bad credit than if you have good or excellent credit, but it’s not impossible. Be prepared to pay a higher interest rate on your mortgage and possibly higher origination fees. This helps to compensate the lender for taking on more risk.
But the bigger question is, should you buy a house with bad credit? While that’s a decision only you can make, even a couple more points could result in paying tens of thousands extra in interest over the life of the loan. And the only way to get around this is to refinance your loan to a lower rate in the future — which can also cost thousands of dollars in closing fees.
Regardless of your credit score, factors that can sway a decision in your favor include:
If your credit isn’t where you’d like it to see it for the lowest interest rates and best terms, you have a few tactics to improve your credit before you apply for a mortgage:
Your credit score plays a key role in a lender’s decision to approve you for a mortgage loan. Before you submit your next mortgage application, know your credit score so you can better position your credit to get the most favorable interest rates and repayment terms.
First-time and experienced homebuyers can take advantage of an FHA loan’s 3.5% down payment option and lenient loan requirements. The only stipulation is that you cannot carry more than one FHA loan at any time.
Student loans affect your credit score just like any other debt. Missing or late payments on those loans can hurt your credit score, and your monthly payments can impact your debt-to-income ratio.
Negative items tend to fall away from your credit report after seven years, while bankruptcies can stay on your report for up to 10 years. But it doesn’t mean your debt disappears — you’ll still owe what you borrowed.
You can build credit fast by paying down high balance credit cards and consistently paying your bills on time and in full. Payment history and credit utilization make up 65% of your FICO score, so it’s wise to prioritize these areas first.
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I only have two medical bill on my credit .Will i be able to raise mine fast.I have car payment too.But thats it.
Hi Booker,
Thank you for reaching out to Finder.
You may be interested in checking our guide on how to improve and raise your credit score. The page offers tips and guides that would help you improve your score. Hope this helps!
Cheers,
Reggie