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What credit score do you need to buy a house?

The credit score needed to buy a house depends on the loan type, but other factors play a role too.

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?

Key takeaways

  • Conventional mortgages require a minimum credit score of 620, while FHA, VA, and USDA loans often accept scores between 500-580.
  • Checking your credit score and report before applying can help correct errors and increase your chances of approval.
  • Buyers with bad credit may face higher interest rates and fees but can improve approval chances with a larger down payment, strong assets and a low debt-to-income ratio.
  • Mortgage lenders use FICO Scores 2, 4, and 5 to assess creditworthiness.

Required minimum credit scores differ across home loan products

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 typeMinimum credit score needed to qualifyTypical minimum down payment requirement
Conventional mortgage6203%
FHA loan580+ to be eligible for maximum financing

500–579 for limited financing(2)

As low as 3.5%(3)
USDA loanNone, but most lenders look for a minimum credit score of 620None
VA loanNone, but most lenders look for a minimum credit score of 620None
Jumbo loanTypically 700 or higherAt 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.

What credit score do mortgage lenders look at?

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):

  • FICO Score 5 based on Equifax data
  • FICO Score 2 based on Experian data
  • FICO Score 4 based on TransUnion data

Compare mortgage lenders

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.

Product USFHL Loan products offered State availability Min. credit score
Conventional, Jumbo, FHA, VA, Refinance
Available in all states
620
Apply online for free and lock in your rate for 90 days.
Conventional, FHA, VA, USDA, Jumbo, Refinance
Available in all states
620
Veterans United stands out from other lenders for its focus on serving the military community.
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How your credit score affects your mortgage rate

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.

What interest rate can I expect with my credit score?

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 ScoreAverage 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

Why you should check your credit score before applying for a loan

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:

  • Correct any inaccurate information or errors in your report.
  • Anticipate your likelihood of approval as well as your interest rate.
  • See where you can improve your overall creditworthiness before buying.

How to buy a house with bad credit

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.

How to increase your chances of approval

Regardless of your credit score, factors that can sway a decision in your favor include:

  • A down payment of 20% or more. The bigger your down payment, the lower the loan-to-value (LTV) ratio and the less risk the lender has to take on.
  • Proof of assets like cash or retirement savings. This also helps to safeguard the lender in the event of a default.
  • A low debt-to-income (DTI) ratio. As a general rule of thumb, your DTI shouldn’t exceed 43%, but lower is better.
  • A strong income and employment history. Lenders like to see that you’ve worked in the same field and for the same employer for at least a couple of years.

How to improve your score before applying for a mortgage

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:

  • Monitor your credit report. Keeping a close eye on your credit helps you more easily and quickly spot errors and gauge whether you’re heading in the right direction. There’s no harm in checking your credit score frequently.
  • Save up for a large down payment. If your credit score is less than perfect, putting more money down can trim your loan amount, ultimately saving you in interest.
  • Hold off on other credit. Each time a potential lender runs your credit report and generates a hard inquiry, your credit score dips. Wait until your mortgage is approved before applying for a credit card or loan.
  • Lower your credit utilization ratio. Pay off as much debt as you can to lower your credit utilization and ultimately improve your score.
  • Pay your bills on time. To assure future creditors that you’ll repay what you borrow, build a history of on-time payments. Payment history is also the most important factor in your FICO credit score.
  • Hire a credit repair service. If you’re feeling stuck, call in professionals to get back on your feet.

Start your credit repair journey with these services

Product USFCR Monthly Fee BBB Rating Customer Support Cancel Anytime
Kikoff
Kikoff logo
$5
C+
Yes
$25
B
Phone, Email, Online Chat
Yes
Save money and build credit with a secured-installment loan that you can access after 12 or 24 months.
Credit Firm Professional Credit Repair
Credit Firm logo
$49.99
C+
Phone, Email, Mail
Yes
Professional credit repair service that can help you create a step by step action plan. Cancel anytime.
$79
C+
Phone, Email, Mail
Yes
Professionals work with you to clean up your credit and raise your credit scores. Cancel anytime.
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Product USFCR-SCR Starting price Trial period Credit scores Credit monitoring Credit reports Update frequency
SoFi Relay
SoFi logo
$0
No
TransUnion
Yes
TransUnion, Equifax, Experian
Weekly
$24.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
TransUnion credit score, monitoring and identity theft insurance.
$19.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Monthly
Get quarterly access to your most widely used FICO® Scores and a 3-bureau credit report.
$99.95
No
TransUnion, Equifax, Experian
Yes
TransUnion, Equifax, Experian
Annually
Monitor your key business relationships to protect your company from losses.
$24.95
7 days
TransUnion
Yes
TransUnion
Monthly
$1 for a seven-day trial to get access to your credit score and credit report from TransUnion.
$0
No
TransUnion, Equifax
Yes
TransUnion, Equifax
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Bottom line

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.

Frequently asked questions

Who can use FHA mortgages?

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.

How do student loans affect your credit score?

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.

How long does it take bad credit to clear from your report?

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.

How fast can I increase my credit score?

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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To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.
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Gabrielle Pastorek is an SEO strategist and publisher at Finder, specializing in banking. She's written more than 800 articles on the site and is a quoted expert in Best Company, HuffPost, Reader's Digest, MSN and MarketWatch. She's secured interviews with key stakeholders in the consumer insights industry, including a senior director at the National Retail Federation. Gabrielle has edited several creative manuscripts and holds an MFA from the University of Pittsburgh and BAs in English and French from Ohio University. See full bio

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2 Responses

    Default Gravatar
    BookerMarch 21, 2019

    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.

      AvatarFinder
      johnbasanesMarch 22, 2019Finder

      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

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