What Credit Score Is Needed to Buy a House?

Written by Elijah BishopUpdated: 20th Jan 2022
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Credit scores can be hard to understand, even for people with excellent financial awareness. Most people know that having a good credit score makes it easy for homebuyers to get a mortgage because it shows the lender that you’re likely to pay back your loan on time.

To get loans from the best mortgage lenders, you need to meet the minimum credit score requirement to qualify.

But do you know what credit score you need to get a mortgage and buy a house? And did you know that the minimum credit score you need to get a mortgage will depend on what kind of mortgage you want?

Understanding your score and how it affects your loan application is essential. Here are the things you need to know. 

What Credit Score Is Needed to Buy a House?

You do not need perfect credit to qualify for a mortgage. Scores can even reach the 500s in some instances. However, because credit scores assess the chance of defaulting on a loan, potential lenders will reward you with more options and cheaper interest rates if you have a higher score.

A credit score of at least 620 is required for most loan types to purchase a home. However, higher is preferable, and consumers with credit scores of 740 or more will qualify for the lowest interest rates. 

Mortgage Loan Type Credit Score Requirements 

Credit scores range between 300 and 850 and are used to determine your creditworthiness. Your credit score is calculated using several factors, and conventional, and government-backed loan credit score requirements vary.

Conventional Loans

Conventional mortgages are house loans that adhere to Fannie Mae and Freddie Mac’s guidelines. Any government program does not cover them. When applying for a traditional loan, you should have a credit score of 620 or above. You may be offered a higher interest rate if your credit score is below 620.

VA Home Loans

Mortgages guaranteed by the Department of Veterans Affairs, commonly referred to as VA loans, do not require a minimum credit score imposed by the government to purchase a home. The primary requirement is a veteran, an active-duty military member, or an eligible spouse.

VA lenders set their own minimum credit score requirements. These range between the low to mid-600s. According to Ellie Mae, the average credit score of VA home purchasers varied between 711 and 721.

>> More: See the Best VA Mortgage Lenders

USDA Loans 

If you intend to live in a rural or suburban region and your income is less than 115 percent of the area median income, you may want to consider a USDA loan backed by the federal government. A USDA loan requires a minimum credit score of 640. However, most lenders require a minimum credit score of 620.

Jumbo Loans 

To qualify for a mortgage that exceeds the conforming loan limit — dubbed a jumbo loan — most lenders will want a credit score of at least 700, preferably 720. Due to the inherent risk of lending that much money, lenders seek prospective house purchasers with excellent financials, particularly a great credit score.

A FICO score of 740 or higher is likely to qualify you for the best jumbo mortgage rates. Utilizing a mortgage calculator demonstrates how even a slight reduction in interest rates can have a significant impact.

Reverse Mortgages

There is no minimum credit score for a reverse mortgage because the vital thing lenders want to know whether you can handle the recurring expenses required to keep the house in good condition. On the other hand, online mortgage lenders will see if you’re behind on any government obligation.

Traditional Refinance 

In general, a credit score of 620 or higher is required for a conventionalmortgage refinance. However, specific government mortgage programs need a credit score of 580 or no minimum at all. 

Subprime Mortgage 

Subprime mortgage borrowers are those who lenders perceive to be a greater risk. Typically, they have credit scores of less than 670 and other unfavorable information on their credit reports. Subprime borrowers may have a more difficult time obtaining loans and, when they do, will typically face higher interest rates.

What Happens If I Don’t Have a Good Credit Score to Buy a House? 

If you have low credit — or no credit — you may be unable to obtain a mortgage unless someone you know is prepared to assist you. Having a co-signer with a higher credit score may help you get the loan.

Another option is to have “a friend — or, more likely, a family member — purchase the home,” add your name to the title, and then refinance into your name when your credit ratings improve sufficiently. If such help is not available, your best bet will be to wait and work on your credit.

How to Improve Your Credit Score to Buy a House 

If your credit score doesn’t qualify you for a reasonable mortgage rate or the type of mortgage you want, it can be a good idea to put off purchasing a house for a while and focus on improving your credit profile. Here’s how to do it:

Monitor Your Credit 

Look for mistakes that will lower your score. If you come upon something, challenge it. You are entitled to at least one free credit report each week from each of the three credit agencies, Experian, Equifax, and TransUnion, until April 20, 2022.

Pay Off Debt 

One of the easiest strategies to improve your credit score is to pay off any outstanding debts. This is useful for several reasons. First, reducing your overall debt obligations allows you to take on more, making you less dangerous in the eyes of lenders.

Lenders also look at credit utilization ratios. It’s how much credit you utilize. Less reliance on your card is preferable. Divide your card balance by your available credit to calculate your credit utilization.

So, if you charge $2,000 a month on your card and your entire credit limit is $10,000, your credit utilization ratio is 20%.

Make On-Time Monthly Payments  

A significant part of what a lender looks for when evaluating your credit is how consistently you pay your monthly mortgage payments. This includes all bills, not just vehicle loans or mortgages; energy and cell phone bills are also important.

Understand Your Credit Mix 

Consider adding the second sort of credit if you have credit cards or installment loans to establish a strong payment history across multiple credit lines. You can add a new credit card, a secured credit card, or a credit-builder loan to your credit file if you have a thin credit file. Keep in mind that the time between opening a new account and applying for a mortgage should be at least six months, so plan accordingly.

Keep Credit Accounts Open 

Closing a card reduces your available credit, which might raise your credit utilization and lower your credit score. Make a charge now and then and pay it off immediately to keep your account from being closed due to inactivity.

Other External Factors to Understand 

A lender’s approval of your mortgage is based on various factors, including your credit score. Here are some more aspects that lenders consider.

DTI Ratio 

The debt-to-income ratio, or DTI, is the proportion of your gross monthly income that goes toward debt repayment. Again, having less debt makes you less dangerous to lenders, and you can take on more through a mortgage.

Divide your recurrent debt (rent, vehicle payments, etc.) by your monthly income to calculate your DTI. Here’s an illustration:

If your monthly debt is $1,000 and your monthly income is $3,000, your DTI is $1,000/$3,000 = 0.33, or 33%. 

It’s in your best interest to aim for a DTI of 50% or less; the lower your DTI, the greater your chances of being provided with a reduced interest rate.

LTV Ratio 

Lenders utilize the loan-to-value ratio, or LTV, to determine the risk of lending to you. It is calculated by dividing the loan amount by the home’s purchase price.

Assume you have a $120,000 mortgage loan and purchase a $150,000 property. Your LTV would be set at 80%. Your LTV drops when you pay off more of your loan. A greater LTV is riskier for your lender because it indicates that your loan covers the majority of the cost of the home.

When you increase yourdown payment, your LTV decreases. Using the previous example, if you acquire a $110,000 mortgage instead because you put down $40,000 ($10,000 more than previously), your LTV is now 0.73, or 73 percent.

LTV ranges accepted by different lenders vary, but it’s better if your ratio is 80 percent or less. If your LTV is more than 80%, you may be forced to pay private mortgage insurance. These changes depending on the type of loan.


Lenders want to know that you will be able to repay what you borrow, therefore they need to see that you have an adequate and consistent income. The income criteria vary depending on the amount borrowed. Still, if you’re borrowing more money, lenders will want to see a larger income to ensure that you’ll be able to keep up with the payments.

Asset Holdings 

Lenders prefer to see that you have some cash in a savings or money market account or that you have assets that can be easily converted to cash in addition to the funds used for the down payment. This guarantees them that even if you encounter a brief setback, such as losing a job, you will be able to keep up with your payments until you can re-establish your financial footing. If you lack sufficient liquid assets, you may be required to pay a higher interest rate.

What Credit Score Do You Need to Buy a Condo?

Purchasing a condominium may be more complicated than buying a home, as you are purchasing a portion of a community with its own set of regulations and fees. Below are several condo mortgages and their respective credit score requirements. 

  • Conventional loans: These loans provide financing for condominiums with as little as 3% down, a minimum credit score of 620, and cancelable mortgage insurance, eliminating the need for a 20% down payment when purchasing a condo. 
  • FHA loans: You’ll need at least a 580-credit score and a 3.5 percent down payment to buy a FHA approved condo via the program. Check the U.S. Department of Housing and Urban Development’s (HUD) condominium search engine to check if the project has been approved or submitted for approval.
  • VA loans: Active-duty military members, veterans, and qualifying spouses can use a VA loan to purchase a condominium. Unlike FHA and conventional loans, this lending program requires no down payment, no mortgage insurance, and has no loan limits for military borrowers. The VA also maintains its list of eligible condominiums.
  • USDA loans: The USDA provides a 0% down payment mortgage to low-income borrowers in rural areas looking to buy a condo. There is no minimum credit score requirement, but you must fulfill the USDA income requirements and establish that you can afford the monthly mortgage payments. To locate a property, use the USDA’s property eligibility tool.

What Credit Score Do You Need to Buy a $250,000 House? 

Your credit score might have a significant impact on the total cost of your loan. Using the FICO loan savings calculator, you can check what kind of rate your credit score could get. Below is a detailed explanation of how your credit score will impact your payments when buying a $250,000 home on a 30-year fixed-rate mortgage:

FICO ScoreRate*Monthly Mortgage PaymentTotal Interest Paid
760 - 8503.164%$1076$137,450
600 - 7593.386%$1107$148,435
680 - 6993.563%$1131$157,312
660 - 6793.777%$1162$168,184
640 - 6594.207%$1224$190,483
620 - 6394.753%$1305$219,645

*Rates are subject to change.

Bottom Line: What Credit Score Do You Need to Buy a House?

If you want to get a mortgage to buy a home, the credit score you need may be different depending on what kind of loan you want to get. That said, the higher your credit score is, the easier it will be to get a better rate on your home loan. Reach out to a mortgage broker to help you find out how you can get a loan.

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Elijah Bishop
Elijah Bishop

Elijah A. Bishop is a Senior Personal Finance Writer who has been writing about real estate and mortgages for years. He has a Bachelors of Arts Degree in Creative writing from Georgia State University and has also attended the Climer School of Real Estate. He also holds a realtor license and has been in and out of the US mortgage industry as a loan officer. Bringing over 15 years of experience, Elijah produces content that analyzes ethnicities, race, and financial well-being. His areas of expertise are mortgages, real estate, and personal loans.