9 Min Read | Published: April 12, 2024
What Credit Score Do I Need to Buy a House?
There isn’t one exact credit score that you need to get a mortgage. Credit score requirements can vary depending on the type of loan and issuer.
At-A-Glance
Mortgage lenders consider your credit score when determining your eligibility for a mortgage.
Minimum credit score requirements vary, depending on the type of loan and issuer.
Healthy credit habits, such as making credit card payments on time, could help your score.
Mortgage lenders may analyze several pieces of your financial background when you apply for a mortgage. And one important factor that they consider is your credit score.
Credit score requirements for mortgages can vary, depending on the lender and what type of mortgage you are getting. Understanding the credit score requirements could help you to prepare for a mortgage application.
Below, we’ll explain the role credit scores play when buying a home, the credit requirements for different types of loans, and a few steps that you can take to help improve your credit score.
Understanding Credit Scores for Home Buying
Your credit score is a number that lenders use to help measure your creditworthiness. Credit scores typically range from 300-850, with higher numbers considered to be better credit scores. Your credit score impacts your chance to get approved for credit cards and loans, including home mortgages, and in some cases can also influence the mortgage rates and terms you may qualify for.
Your FICO® Score is calculated by taking into account five factors.1 These factors, along with their relative weightages are:
1. Payment history: 35% of your score
Your payment history has one of the most significant impacts on your credit score. On-time payments could contribute to a healthy credit score over time while late payments could negatively impact your score.
2. Amounts owed: 30% of your score
Amounts owed refers to the amounts that you owe relative to your available credit, sometimes referred to as your credit utilization ratio. Continually spending up to or above your credit limit could negatively impact your credit score. On the other hand, maintaining balances could help your score. A good guideline is to try to keep your credit utilization ratio below 30%.2
3. Credit history length: 15% of your score.
A longer credit history tends to help your score. Bureaus factor in the average age of all your accounts, as well as the ages of your oldest and newest accounts, when calculating your credit history.
4. Credit mix: 10% of your score.
A more diverse mix of loans and credit cards could help your score. For example, having two credit cards, a student loan, and a mortgage could help increase your credit score more than only having a student loan.
5. New credit: 10% of your score.
Your credit score could drop whenever you apply for new credit. This is called a hard credit check, or hard inquiry. However, individual hard inquiry effects fade over time.
Credit Score Requirements for Different Loan Types
Three different types of mortgages are conventional, FHA, and VA loans. Below, we’ll explore the credit score minimum requirements for each type and the scores that mortgage lenders tend to look for.
1. Conventional loans
Minimum credit score: Typically 620 (But varies, depending on the lender)
Conventional loans are regular, private mortgage loans offered by banks and lenders. Regardless of the lender, homebuyers will typically need a minimum credit score of at least 620 to qualify, although some lenders may offer loans to buyers with credit scores that are as low as 500.3 Higher credit scores, however, may help you qualify for a better interest rate.
2. FHA loans
Minimum credit score: Typically 580 (But varies, depending on the lender)
Federal Housing Administration (FHA) loans are offered by lenders but guaranteed by the FHA, allowing lenders to approve lower credit scores than with conventional loans.
While the minimum credit score for FHA loans varies, depending on the lender, the FHA has guidelines regarding minimum credit score. Typically, a minimum score of 580 (and a down payment of 3.5%) is required.4
3. VA loans
Minimum credit score: No official score, varies by lender
The Department of Veterans Affairs (VA) offers loans with favorable terms to active service members, veterans, and their surviving spouses. These loans are provided by private lenders but backed by the VA.
The VA does not set a minimum credit score requirement to qualify for these loans.5 However, lenders may set their own minimum scores. If you’re eligible for a VA loan, you can shop with different lenders to find one that suits your score and financial circumstances.
Tips to Help Improve Your Credit Score to Buy a House
While credit scores can take time to build, here are a few steps that you could take to help improve your credit score in preparation for buying a home:
1. Use credit wisely
Avoid using too much available credit. Keeping your credit utilization ratio low could help your score.
2. Pay off credit card balances on time
Paying your credit card bills on time each month can help your credit score as well.
3. Avoid frequent credit applications
Too many applications in a short time could negatively impact your credit score.
4. Don’t close accounts
Your number of accounts and type of open accounts impact your credit mix and credit history, two factors that can impact your FICO score. Keeping your accounts open could benefit your credit mix and history, and potentially positively impact your credit score.
Frequently Asked Questions
While a 620 credit score is typically required to purchase a home with a conventional loan, higher credit scores could lead to a lower interest rate. To help increase your chance of getting approved and in some cases, even qualifying for a mortgage with a lower interest rate, it’s best to have a credit score in the good range, which is a FICO score of 670 or higher.6
Depending on the loan type and lender, you may be able to qualify for a mortgage even if your credit score is at 500. However, lower credit scores may result in higher mortgage rates.
Higher credit scores could lead to better mortgage rates. A higher credit score could also make it easier to use a lower down payment on loans like FHA loans, though this may vary by lender.
The Takeaway
Different lenders and loan types may have different credit score requirements. Conventional loans tend to require higher scores, whereas government-backed loans from the FHA and VA may have more lenient credit score requirements.
1,2 “What Affects Your Credit Scores?,” Experian
3 “What Credit Score Do You Need To Buy A House?,” Rocket Mortgage
4 “FHA Loan Credit Score Requirements,” Forbes
5 “Don’t delay! Act now to secure your hard-earned VA Home Loan,” VA News
6 “What Is a Good Credit Score?,” Experian
Bradley Schnitzer is a writer and email strategist who has covered personal finance and small business topics for over five years. He is passionate about personal finance and helping others understand their money.
All Credit Intel content is written by freelance authors and commissioned and paid for by American Express.
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