Home Owner

What credit score is needed to buy a house?

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🚨 The minimum credit score needed to purchase a home can be anywhere from 580 to 640 depending on the type of mortgage.

Your credit score can make or break your house hunt. In addition to dictating the types of loans you’re eligible for, your credit score helps lenders determine your interest rate and other fees related to the loan. This is why it is important to understand your finances and know what credit score is needed to buy a house.

We’ve updated this guide for 2022 to ensure you have what you need during your search this year. Our guide identifies the ideal credit scores for different types of loans and explains how your credit score influences the home-buying process and what you can do to improve your credit score.

Minimum credit score needed to buy a house (by types of loan)

The minimum score you’ll need differs based on the type of mortgage you want. Below we have a list of the typical minimum scores needed for several types of loans. Your current financial situation, including your credit score, can help you decide which is the best mortgage for you. Keep in mind that these scores may vary from one loan to another.

Type of loan Typical minimum credit score What is it?
FHA loan 580 with a 3.5% down payment A loan insured by the Federal Housing Commission, popular for home buyers with poor credit or little savings
FHA 203K loan 580 with a 3.5% down payment A loan to finance the cost of renovation in addition to the purchase cost
Conventional loan 620 A loan not backed by a government entity
VA loan 580 – 640 A loan available to veterans and partially backed by the Department of Veterans Affairs
USDA loan 640 A loan eligible for rural and suburban home buyers
Jumbo loan 700+ A large loan that is higher than the conventional conforming loan limit

FHA loan: 580

FHA loans are insured by the Federal Housing Administration. In 2023, the minimum credit score to qualify for the low down payment advantage is 580, and under certain circumstances, you can be approved with a credit score as low as 500. If you have a lower credit score, this may be a good option for you. However, if you have a higher credit score, you’ll be able to qualify for a better FHA loan with only a 3.5 percent down payment.

FHA 203(k) loan: 580

Section 203(k) insurance lets homebuyers and owners finance both the purchase and renovation of a house through a single mortgage. FHA 203(k) loans are intended to support lower-income families by helping them update older homes. The type of 203(k) loan will depend on the extent of the needed repairs.

Conventional loan: 620

Conventional loans are traditional commercial mortgages that are not backed by the government. They are usually backed by Fannie Mae or Freddie Mac, which are government-sponsored enterprises. When you apply for a conventional loan, it’s recommended to have a credit score of 620, which is the requirement set by Fannie Mae and Freddie Mac. If you have a higher credit score and money saved up for a large down payment, you may be able to score a low interest rate.

VA loan: 580 – 640

A VA loan is offered by the Department of Veterans Affairs for veterans and their family members. There are three VA-backed loans, as well as a VA direct loan. With a direct VA loan, the VA serves as your mortgage lender so that you don’t have to go through a private lender. They require no down payment and often have low interest rates.VA-backed loans do not have a minimum credit score, so lenders have the discretion to decide on the credit score requirement.

USDA loan: 640

USDA loans are government-backed loans designed specifically for properties located in eligible rural areas. You must also meet certain income requirements to qualify for a USDA loan. While there are no official credit score requirements, you can qualify for automatic underwriting approval through the USDA’s Guaranteed Underwriting System if you have a minimum FICO® score of 640. You may still be able to qualify with a score under 640, but you’ll need to go through manual USDA underwriting. Down payments are not required and interest rates are usually lower than conventional loan rates.

Jumbo loan: 700+

Jumbo mortgages allow people to get funding for expensive or luxury properties. Jumbo loans surpass the limits of conventional conforming loans. In 2023, the limit is $726,200 for a single-family home in most areas of the U.S. While there isn’t a specific credit score requirement, good to excellent scores (around 700 or more) are more likely to be approved.

Understanding your credit score

Once you have a clear understanding of the credit score requirements for different home loans, you may want to assess your own credit score. In the event that your scoreis not high enough to secure a home loan, there are several strategies you can use to increase it. Before delving into different methods to boost your credit score, it is important to understand how your credit score can affect your ability to find the right house.

Credit score ranges

It’s important to understand what generally determines a “good” credit score versus a “poor” credit score. There are a few different credit scoring systems, but the VantageScore and FICO scoring systems are the most common. Both systems score from 300 to 850 and determine credit score based on a variety of factors, like payment history and recent inquiries. See the FICO ranges of credit scores below.

Credit score ranges
<580 Poor
580 – 669 Fair
670 – 739 Good
740 – 799 Very good
800+ Exceptional

What impacts your credit score?

Here are the five factors that impact your FICO credit score:

  • Payment history (35 percent): Your ability to consistently make payments on time has the biggest impact on your FICO score. Any missed or late payments will typically harm your score.


  • Amounts owed/credit utilization (30 percent): The second-largest impact on your score comes from the amount you owe compared to the amount of credit you have. A lower credit utilization usually means a better score.


  • Length of credit history (15 percent): The length of your credit history is another factor. A long credit history is preferred because it gives a larger glimpse into your payments and behavior.


  • Credit mix (10 percent): The types of credit you use also have a small impact on your FICO score. If you successfully manage a mix of credit cards, loans and other things, this can help increase your credit score.


  • New credit (10 percent): It can hurt your FICO score if you apply for multiple credit accounts within a short amount of time.

How your credit score impacts home loans

Your credit score is an indicator of your ability to pay back lenders. A low score raises red flags and makes you appear risky. Due to this, lenders may ask for a higher down payment or give you a high interest rate. A low credit score also narrows the pool of loans you can consider when buying a home.


Meeting the minimum requirements for a loan may not always be the best option. Although you may qualify for a loan, you may have to pay a high interest rate depending on your score.


To get a more tangible picture of the impact of your credit score, use our mortgage calculator to see how drastically things can differ based on increases in your score


Buying a home with poor credit

A credit score in the 500s will likely narrow your options down to a bad credit loan. These loans normally come with higher interest rates and additional fees since lenders see you as a high credit risk.

As mentioned above, an FHA loan is one option to consider if your score is low or if you would have trouble making a large down payment. FHA loans are backed by the Federal Housing Administration and are less risky for lenders. These loans have less strict requirements for down payments and credit scores in comparison to other conventional loans, so this may be an option for you if you’re having trouble securing other types of loans.

A score between 500 and 580 requires a minimum down payment of at least 10 percent. A score of at least 580 requires a minimum 3.5 percent down payment.

What else do lenders consider?

Keep in mind that lenders may take other factors into account when considering you for a loan. For example, it may help your chances of buying a home if a lender is aware of a past financial hardship you have since recovered from. Lenders also look at factors besides your credit score to determine if they’ll approve you for a loan. Some of these things include:

  • Debt-to-income (DTI) ratio: This metric predicts your ability to pay back the money you’ve borrowed. The lower your DTI, the better, because it means you’re not spending a large portion of your income paying off debt. Prospective home buyers usually need to have a debt-to-income ratio lower than 43 percent, and some conventional lenders prefer a DTI of 36 percent. To improve your DTI, you need to increase your income and pay off your debt.


  • Down payment/loan-to-value ratio: If you can put more money into your down payment, you’re more likely to get approved for a mortgage with a lower interest rate. A larger down payment will lower your loan-to-value ratio, which lenders use to determine the risk level of the loan. This is the percentage of the home’s price that you are borrowing. To qualify for a lower interest rate, aim for a loan-to-value ratio of less than 80 percent.


  • Employment history and income: Your income will show lenders if you make enough to afford your monthly payments, and your employment history will show them if you have a good work history and stable job that you are unlikely to lose.


  • Savings: Most lenders will want to make sure you have enough in savings to cover several months’ mortgage payments.

Having positive marks in these areas can have an impact on a lender’s decision, especially if your credit score is low. However, improving your credit score will enhance your chances of securing the loan you want.

If your credit score isn’t up to par with what you need to take out a home loan, you should consider taking steps to improve it. This might include paying off outstanding debts, planning to make all your current payments on time or partnering with a credit repair firm to address any inaccurate or unfair items on your credit report. Take a look at our tips below to learn how you can take steps to improve your credit score.

Pay outstanding debts

Getting your debts down is important to help lower your DTI ratio. Although your DTI ratio doesn’t directly affect your credit score, it’s a good idea to get it down for two reasons. First, as we’ve mentioned earlier, DTI is a deciding factor for lenders when granting loans. Prospective homebuyers should have a low DTI to secure a home loan. Most qualified mortgages have a max DTI of 43 percent. The higher your DTI, the riskier you appear to a lender.

Second, paying off revolving debt, like credit card balances, can help bring down your credit utilization. A lower credit utilization can help raise your credit score. When applicable, send a pay for delete letter to see if you can get certain negative items removed from your credit report. Otherwise, you can have this information on your credit report (and negatively impacting your credit) for seven to 10 years.

Get up to speed with payments

Late and missed payments also negatively affect your credit score. Make a financial plan to catch up and stay caught up with your payments. Consider different payment strategies like the avalanche method and snowball method to effectively pay off your debt. Depending on your situation, you may also want to consider consolidating your debts or settling some of your debts.To help pay your bills on time, you can also set up payment reminders or autopay.

Keep credit cards open

The length of your credit history makes up 15 percent of your FICO score, so it can help to keep active credit cards open. This also increases the amount of available credit you have.

To prevent the card issuer from closing old cards due to inactivity, make occasional charges and pay them off promptly.

Keep credit utilization low

Your credit utilization is the second most important factor that goes into your credit score, so it’s important to keep your credit balances low and pay down debt. To determine your credit utilization, add up your credit card balances and divide by your total credit available.

A credit utilization ratio of less than 30 percent indicates to lenders that you are financially responsible and less risky.

Avoid applying for too much credit

Only apply for new credit accounts, such as credit cards or loans, when you need them—applying for too many new accounts too rapidly can lower your score. Too many hard inquiries can also raise red flags for lenders because it may indicate you need to borrow more money than you already have. New credit accounts also lower your credit age and can cause you to accumulate more credit card debt.

Check your credit reports for errors

A Consumer Reports investigation found in 2021 that one in three credit reports contained errors. This is why you should periodically review your credit reports for any inaccurate items. These mistakes can add up and drastically impact your score if they’re not removed. And thanks to the Fair Credit Reporting Act (FCRA), you have every right to dispute your credit reports whenever you find inaccurate information

Now that you know what credit score range is needed to purchase a home, follow our above-mentioned tips to work on raising your score and opening the door to a more favorable home loan. Buying a home can be more complicated when you have below-average credit. This is why it’s important to work on repairing your credit errors long before it comes time to buy property—and The Credit Connect Enterprise could help. Our credit repair team can work with you to address inaccurate items listed on your credit reports.