What credit score is needed to buy a house?

Your credit score reflects how well you’ve handled debt in the past and how likely you are to repay debt in the future. The scores come from formulas called scoring models, the most popular of which is the FICO model from Fair Isaac Corporation. 

FICO and other scoring models base the scores on information from your credit report. Payment history is the most influential, but credit utilization, the length of your credit history, and the types of credit you have also factor in. 

When you apply for a mortgage loan, the lender looks at the score derived from your credit report and uses it to decide whether to extend you the loan. It’s possible to buy a home with a score of 500, but most borrowers will need much higher scores — you’ll typically need at least 620, but you can get better rates with higher scores.

What credit score do you need to buy a house? 

The minimum credit score to buy a house depends on the type of mortgage loan you use to finance the purchase and the lender’s policies. The minimum could be as low as 500 or as high as 620 or more.

Conventional loans have the strictest standards. Fannie Mae and Freddie Mac, the corporations that back the loans, have their own minimum, but lenders’ requirements might be higher.

Mortgage loans backed by government agencies often have lower minimum credit score requirements, or even no minimum requirements. But as with conventional loans, a lender can set a higher minimum than the government agency requires.

Minimum credit scores for different types of loans 

Although the backers of every loan type establish lending standards, not all have a minimum credit score requirement. The minimum credit score for conventional loans is 620, for example, while the minimum credit score for FHA loans is 500. But the Department of Veterans Affairs has no minimum credit score for VA loans, and the U.S. Department of Agriculture has none for USDA loans.

Government agencies may guarantee FHA, VA, and USDA loans, but the loans are administered by private lenders that can sometimes have higher credit requirements. For example, VA loans have no credit score requirements set by the administration, but a lender might require a score of at least 620. In short, your credit score is likely to factor into your lender’s credit decision no matter what kind of loan you apply for.

Here are the minimums for the most common types of mortgage loans:

How does your credit score affect your mortgage rate?

Your credit score predicts how likely you are to repay your mortgage loan. A higher score predicts a low risk of default. That low risk allows the lender to offer a lower interest rate. 

A low score, on the other hand, means the borrower has a higher risk of defaulting on the loan. The lender offsets some of that risk by charging a higher interest rate.

Here’s an example of how your annual percentage rate could vary based on your credit score:

A small difference in mortgage rates can influence your monthly mortgage payment and the amount of interest you pay over the life of the loan. 

Say, for example, you take out a 30-year fixed-rate mortgage loan for $320,000. Using the APR samples from above, here’s how much you’d pay each month and how much interest you’d pay over 30 years:

Can you get a mortgage with a low credit score? 

You can get an FHA loan with a credit score as low as 500 if you have at least a 10% down payment. That’s the minimum score allowed by the Federal Housing Administration, but some lenders might have higher requirements. If you want to put 3.5% down, you’ll need a score of 580.The minimum credit score for a conventional mortgage backed by Fannie Mae or Freddie Mac is 620, which is considered a “fair” score.

That said, your chances of being approved might be better if your score is higher than the minimum. In fact, lenders originate very few mortgage loans for borrowers with scores below 659, according to the New York Federal Reserve. Of roughly $400 billion in loans originated in the first quarter of 2024, over $300 billion worth went to borrowers with scores of 760 or more vs. fewer than $100 billion in loans for borrowers with scores of 759 or lower.

5 tips to improve your credit score before buying a house 

A good credit score can help you get approved for a loan and secure a better interest rate. Although the prospect of raising your score can be daunting, especially if your score is very low, the following tips could help improve your credit score:

1. Correct credit report errors: You can get free copies of each of your reports from AnnualCreditReport.com. Look for errors that might be weighing down your score and dispute any that you find.
2. Pay bills on time: Payment history is the most influential component of your credit score, so on-time payments are crucial to increasing your score.
3. Keep credit utilization low: Avoid using more than a small amount of the available balance on credit cards and other accounts, and pay off your charges throughout the month.
4. Request credit limit increases: Higher limits reduce your credit utilization rate.
5. Avoid applying for new credit or closing current accounts: Taking on new credit shortens the average age of your accounts, and closing accounts increases your credit utilization rate. Both can negatively impact your score.

What credit score is needed to buy a house FAQ 

What is the lowest credit score to buy a house?

The lowest credit score to buy a home is 500 for an FHA loan if you put down at least 10%. If you have a score of 580, you could qualify for an FHA loan if you put down at least 3.5%.

How long does it take to improve your credit score?

The exact amount of time depends on the reasons for the low score. Correcting incorrect information, such as a long-paid collection account, could boost your score within 30 days when the creditor reports the updated information. Paying down or paying off credit cards and other debt can also have an almost immediate impact.

Overdue payments, on the other hand, might take longer to recover from because you have to build a history of on-time payments. Still, each one you make pushes the last overdue one further into the past, and its impact lessens over time.

Do mortgage lenders look at all three credit scores?

Sometimes. For conventional loans, for example, the lender must request FICO scores from at least two of the three credit bureaus: Equifax, Experian, and TransUnion. 

The scores might differ slightly because creditors don’t necessarily report your account information to each bureau, and bureaus occasionally make errors that show only on their own reports.

Lenders can interpret the multiple scores a few different ways. They might use the average or the median of all the scores, for example, or take the middle one of three.

How does a co-signer affect your credit score for a mortgage?

Having a co-signer doesn’t affect your credit score. Most lenders will still consider the lowest score the applicants have when they evaluate whether to approve you for a loan. But it can help you get approved for a mortgage if the co-signer can help you improve your overall standing in other areas. For example, the lender will also weigh your debt-to-income ratio — your total monthly debt payments divided by your pre-tax monthly income — along with your income and credit score to determine whether you can afford the loan. If your co-signer has low debt and a high income, it could help reassure the lender that you both can afford to repay the mortgage.