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What credit score is needed to buy a house?

What credit score is needed to buy a house?

Most lenders require a minimum score between 580 and 620

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Updated: 08/28/2023

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Along with saving up for a down payment, having a great credit score is at the top of most potential homebuyers' to-do lists. Not only is a healthy credit score essential for lender approval, but your number determines your interest rate and ultimately how much your new home will cost you in the long run.

Thankfully, buyers with excellent credit scores (over 800) aren’t the only ones who qualify for mortgage loans. Most lenders consider scores of 740 to be “very good,” while still accepting buyers with credit scores as low as 500, depending on the loan type.

Here’s everything you need to know about which credit scores are needed to qualify for a mortgage and to get the best interest rates. Plus, if your score doesn’t make the cut just yet, we’ll show you how to improve it.

Key insights

Conventional loans typically require a minimum credit score of 620, while FHA loans may accept borrowers with credit scores as low as 500.
You can get a mortgage with a lower credit score, but having a higher score can lead to better loan terms, lower interest rates and a lower down payment.
Lenders consider multiple factors when determining your eligibility for a mortgage, including your income, debt-to-income ratio, employment history and savings

What is the minimum credit score to buy a house?

There’s no hard-and-fast rule about what score is good enough to qualify for a mortgage. It depends on what type of mortgage loan you get and other factors that we'll explain below.

	Minimum credit score	Best for	Learn more
Conventional loan	620	Traditional homebuyers	Compare lenders
FHA loan	500 to 580	Buyers with low to moderate income	Compare lenders
USDA loan	620 to 640	Buyers in rural areas	Compare lenders
VA loan	580 to 620	Veterans	Compare lenders
Jumbo loan	680 to 700	Buyers in high-price markets	Compare lenders

Since conventional mortgages are backed by private lenders (typically a bank, credit union or direct lender), they have the strictest credit score requirements.

“There are a few banks that have no minimum score requirements, but in general, for a conventional loan, the minimum score is 620,” said Melissa Cohn, regional vice president at William Raveis Mortgage. “There are lenders that will go to 580 as long as there are no late mortgage payments in the past 12 months.”

Cohn said that for jumbo loans, which are nonconforming conventional loans, some lenders require scores over 680, but more look for minimum scores of 700 and over 720 for an interest-only loan.

VA loans and USDA loans are government-backed loans that don’t require a down payment or have a set minimum credit score. However, even though the government does not set credit score minimums, lenders prefer buyers to have a score starting between 580 and 620 for VA loans and a score of at least 640 for USDA loans.

The average FICO score in the U.S. in 2022 was 714, according to Experian.

» MORE: Conventional mortgage vs. FHA

What do mortgage lenders look for on your credit report?

Your credit report is a financial report card. Your credit score is the grade. It goes up or down based on how well you’ve paid back money you’ve borrowed in the past — with credit cards, car loans and student loans, for example.

Your credit report is a financial report card. Your credit score is the grade. It goes up or down depending on how you’ve paid back debts in the past.

Lending hundreds of thousands of dollars is a risky undertaking for lenders, which is why the mortgage process is so thorough. Lenders cannot afford to take on a risky buyer, which is why both your credit score and credit report are checked multiple times throughout the process.

Lenders look at your credit report for red flags, such as bills in collections, foreclosures or bankruptcies. They will also look at factors such as:

Timeliness of payments
How credit is used
Length of credit history
New credit accounts
Types of credit used

If you have a very low score, you might have a better chance of qualifying if you’re able to offer a higher down payment (typically around 20% or more of the home’s purchase price). You can get advice from a housing counselor through the Department of Housing and Urban Development.

» MORE: What is a good credit score?

Other factors mortgage lenders consider

Even if you have excellent credit, your lender will still require a lot of paperwork.

Wayne, a reviewer from Florida, experienced this when he applied for a 15-year mortgage loan. “The paperwork required to be filed was extensive,” he said. “I was sitting with an 840 credit score. I didn't think all that paperwork would be necessary with that kind of credit score, credit history and income level.”

While your credit history is an essential piece of the puzzle, there are other factors mortgage lenders look at as they assess your merit as a borrower.

Debt-to-income ratio: Your DTI ratio tells lenders how much of your gross monthly income goes toward repayment of debt. It’s calculated by dividing your monthly debt by your total gross monthly income. Lenders generally look for a number below 36% to 42%.
Loan-to-value ratio: LTV represents the amount of your mortgage loan compared with how much the house is actually worth. It’s calculated by dividing the loan amount by the house’s value. Conventional mortgage lenders like to see a ratio of less than 80%.
Savings and assets: Having savings or investments shows lenders you’re responsible and have access to additional funds to keep up with mortgage payments.
Employment history: Most lenders require at least two years of consistent employment in the same field, though you’re unlikely to see salary requirements stated.

» MORE: What does clear to close mean?

How to improve your credit score to buy a house

If your credit score is on the lower end of the spectrum, it’s smart to take steps to improve it before applying for a loan. This will unlock better interest rates and keep your costs as low as possible.

Lowering your credit utilization while increasing debt payments will help boost your score. Avoid applying for any new credit cards or other loans if you can, but don’t close old accounts.

Here are three more tips to fix your credit enough to buy a home:

Create a workable budget

First, write down all of your living expenses. Be sure to include electricity, gas and water bills, car maintenance (including fuel), food, groceries and any miscellaneous items, like money spent on entertainment or child support payments.

Then, write down how much money you earn each month (total regular income after all deductions).

Subtract your expenses from your income. This is your budget. If it’s a negative number, look for ways to reduce expenses or increase your income. Seeing it all on paper helps you come up with a plan for how to spend and save each month.

Get a grip on your debt

Understanding how much you owe is the first step to getting out of debt. Make a list of all your creditor expenses, such as credit cards, student loans and car payments. Next to each, write down how much you owe and the interest rate.

It’s usually most strategic to pay off high-interest debt first. A consultation with a credit counselor or debt management plan (DMP) could be helpful if you’re struggling with a lot of credit card debt.

Work with creditors

If you have any late payments on your credit report, you can try writing a goodwill letter to your creditors to see if they will remove the negative mark, which can improve your score.

Remember that how long it takes to fix your credit depends on where you started and what your credit score goal is. It could take two months or two years.

Once your score meets your goal, contact mortgage lenders in your area to see which loan options and interest rates you can get.

How does credit score affect mortgage rates?

A couple of percentage points might seem minor, but it can add up to significantly higher costs in your monthly mortgage payment and over the life of the loan. Below, compare average rates for a 30-year fixed mortgage for a $300,000 loan (as of publishing).

Keep in mind that your mortgage rate is determined by multiple factors —your credit score is just one of these. Lenders also consider your income and employment status, which don’t affect your credit score one way or the other.

Average rates on 30-year fixed-rate mortgage by FICO score as of Aug. 23, 2023

FICO score	APR	Monthly payment
760 to 850	7.168%	$2,030
700 to 759	7.390%	$2,075
680 to 699	7.567%	$2,111
660 to 679	7.781%	$2,156
640 to 659	8.211%	$2,246
620 to 639	8.757%	$2,362

Source: FICO

FAQ

Can I buy a house with bad credit?

A few credit blips shouldn’t prevent you from being a homeowner. Because lenders consider borrowers with low credit scores to be “riskier,” you might have to make up for it with a more substantial down payment or add a co-signer to the loan.

For government-backed loans, you can apply with a credit score as low as 500. Remember, your credit score takes a small ding if the lender does a hard inquiry during the mortgage preapproval process.

If you keep getting denied, there are ways to boost your score. Read how to find the best bad credit home loans for more information.

Can I buy a house without a credit score?

It's possible, but challenging, to buy a house without a credit score. Some lenders use manual underwriting processes that consider alternative credit data, such as rent and utility payments. However, these loans may come with higher interest rates or other conditions.

What credit score is needed to buy a condo?

You basically need the same credit score you need to get a house (at least 580 to 620) to buy a condo. There are also income and down payment requirements. In some ways, condo mortgages are more complicated and harder to get than a traditional home loan, however.

What affects your credit score?

Five primary factors affect your credit score: payment history, debt utilization, length of credit history, types of credit utilization and number of recent credit inquiries.

The three credit reporting bureaus weigh these factors differently. For example, FICO pays the most attention to your payment history and the total amount of debt. VantageScore heavily considers your total credit usage, available credit and credit mix.

Bottom line

Buying a house is a big deal, which is why it is important to know where your credit score stands and what it needs to be in order to be approved by the lender of your choice. Your credit score serves as a reflection of your creditworthiness, providing lenders with an insight into your past behavior toward managing debt.

If your score isn’t lender-worthy just yet, don’t worry — it can get there with some effort. Credit scores are not fixed and can be improved over time. Making regular, on-time payments, reducing your overall debt, limiting new credit applications and promptly addressing any errors on your credit report can all contribute to an improved score.

Article sources

ConsumerAffairs writers primarily rely on government data, industry experts and original research from other reputable publications to inform their work. Specific sources for this article include:

U.S. Department of Veterans Affairs, “Eligibility requirements for VA home loan programs.” Accessed May 8, 2023.
U.S. Department of Housing and Urban Development, “Buying a Home.” Accessed May 8, 2023.
U.S. Department of Agriculture, “Single Family Home Loan Guarantees.” Accessed May 8, 2023.
FICO, “Home Purchase Center.” Accessed Aug. 23, 2023.
Consumer Financial Protection Bureau, “Check your credit.” Accessed May 8, 2023.
Experian, “What Is the Average Credit Score in the U.S.?” Accessed May 8, 2023.