What Credit Score You Need to Buy a House

The minimum credit score to buy a house depends on the loan type, not on a single rule

There is no single credit score that every lender requires. A conventional loan (the most common type) typically requires a score of 620 or higher, but many lenders prefer 680 or above. FHA loans, which are designed for first-time buyers, often accept scores as low as 580. VA loans and USDA loans have their own minimums, which also vary by lender. The score that matters is the one your specific lender uses, and different lenders have different thresholds.

Your credit score is a three-digit number that reflects your history of borrowing and repaying money. The most widely used score is the FICO score, which ranges from 300 to 850. Lenders use it to predict whether you will repay a mortgage. A higher score usually means lower interest rates and better loan terms. A lower score may mean you pay more over the life of the loan, or that some lenders will not work with you at all.

Key Takeaways

• Conventional loans typically require a credit score of 620 or higher, though many lenders prefer 680 and above.
• FHA loans accept scores as low as 580, making them an option for buyers with lower scores.
• Your score is just one factor lenders consider; your down payment size, debt-to-income ratio, and employment history also matter.
• You can check your credit score for free once a year through AnnualCreditReport.com, which is the official government site.
• Improving your score before applying takes time, but paying bills on time and reducing debt can help.

How credit scores are built and what lenders look at

Your credit score is built from five main categories: payment history (35 percent), amounts owed (30 percent), length of credit history (15 percent), credit mix (10 percent), and new credit inquiries (10 percent). Payment history is the largest factor — missed or late payments hurt your score significantly. Amounts owed refers to how much of your available credit you are using; using less than 30 percent of your limit is better than maxing out cards.

Lenders also look beyond your score. They want to see stable employment, a down payment you can afford to lose, and a debt-to-income ratio (the percentage of your monthly income that goes to debt payments) below 43 percent. A lender may deny you even with a 650 score if you have missed rent payments in the past two years, or approve you with a 620 score if your income is high and your other debts are low. The score is a starting point, not a final decision.

Conventional loans and the 620 minimum

A conventional loan is a mortgage backed by Fannie Mae or Freddie Mac, two government-sponsored companies that buy mortgages from lenders. These loans do not require mortgage insurance if you put down 20 percent or more. The minimum credit score for a conventional loan is usually 620, but this varies by lender and by how much you are putting down.

If you have a score between 620 and 679, expect to pay a higher interest rate than someone with a 700+ score. You may also need a larger down payment — some lenders require 10 percent down for scores in this range, while others accept 5 percent. If your score is below 620, most conventional lenders will not work with you, and you will need to look at FHA loans or wait until your score improves.

FHA loans for buyers with lower credit scores

An FHA loan is insured by the Federal Housing Administration and is designed to help buyers who cannot meet conventional loan requirements. The minimum credit score for an FHA loan is typically 580, though some lenders go as low as 500 with a larger down payment. FHA loans require mortgage insurance, which adds to your monthly payment, but they allow smaller down payments (as low as 3.5 percent) and are more forgiving of past credit problems.

FHA loans do require that you have not had a bankruptcy in the past two years or a foreclosure in the past three years. Late payments and collections hurt your chances, but they do not automatically disqualify you the way they might with a conventional lender. If you are a first-time buyer with a score below 620, an FHA loan is often the most realistic path to homeownership.

VA and USDA loans have their own score requirements

If you are a military member, veteran, or surviving spouse, you may be able to use a VA loan, which is may provide by the Department of Veterans Affairs. VA loans have no official minimum credit score, but most lenders require 620 or higher. Some VA lenders will work with scores as low as 580. VA loans require no down payment and no mortgage insurance, which makes them powerful tools for may be able to access buyers.

USDA loans are for buyers in rural areas and are may provide by the U.S. Department of Agriculture. Like VA loans, they have no official minimum score, but most lenders require 620 or higher. USDA loans also require no down payment and no mortgage insurance. If you live in a rural area or are may be able to access for a VA loan, these programs can help you buy a house with a lower score than a conventional lender would accept.

How to check your credit score and understand what you see

You can check your credit score for free once per year through AnnualCreditReport.com, which is the official government website. This site gives you your credit report from all three bureaus (Equifax, Experian, and TransUnion) but not your score. To see your actual FICO score, you can use your bank's website (many banks show your score for free), or you can pay a small fee to buy it directly from FICO or from the three bureaus.

When you look at your credit report, check for errors. Mistakes happen — a payment marked late when it was on time, an account opened in your name that is not yours, or a debt listed twice. If you find an error, you can dispute it with the bureau for free. Disputes usually take 30 days to resolve. Fixing errors can raise your score by 10 to 100 points, depending on what the error was.

Steps to improve your score before buying

If your score is below 620, you have options. The fastest improvement comes from paying down debt, especially credit card balances. Paying off a card entirely or dropping your balance below 30 percent of the limit can raise your score by 10 to 50 points within a few months. Do not close the card after you pay it off — closing it lowers your available credit and can hurt your score.

Make all payments on time, starting now. Late payments hurt your score for seven years, but the damage fades over time. A late payment from two years ago hurts less than one from two months ago. If you have missed payments, getting current and staying current is the single most important thing you can do. Avoid opening new credit accounts or taking on new debt while you are trying to improve your score — each new account and each hard inquiry lowers your score slightly.

Improving your score takes time. A score in the 580 to 620 range may take six months to a year of on-time payments and lower balances to reach 650 or above. If you need to buy soon, an FHA loan may be your faster option. If you can wait, improving your score will save you money in interest over the life of the mortgage.

Frequently Asked Questions

Will a lender tell me my score before I apply?

No. Lenders pull your credit report only after you submit a formal application. Before that, you can check your own score through your bank or AnnualCreditReport.com. Once a lender pulls your report, it counts as a hard inquiry and lowers your score slightly. Multiple inquiries within 14 to 45 days (depending on the score model) usually count as one inquiry, so shopping around with several lenders in a short window does less damage than spreading applications over months.

Can I buy a house with a 600 credit score?

With a 600 score, a conventional lender will not work with you, but an FHA lender may. Most FHA lenders require 580 or higher, so a 600 score puts you in range. You will need a down payment of at least 3.5 percent, proof of stable income, and a debt-to-income ratio below 43 percent. You will also pay mortgage insurance for the life of the loan, which adds to your monthly payment.

Does paying off old debt help my credit score?

Paying off current debt helps more than paying off old debt. A recent late payment or high balance hurts your score more than an old one. If you have old collections or charge-offs, paying them off can help, but it does not erase them from your report — they stay for seven years. Paying them off shows good faith and may help a lender see you as lower risk, even if your score does not jump immediately.

How much does my credit score affect my interest rate?

The difference between a 620 score and a 750 score can be 1 to 2 percentage points on your interest rate. On a $300,000 mortgage, that difference adds up to $200 to $400 per month. Over 30 years, it can mean $70,000 to $150,000 more in total interest. This is why improving your score before applying, if you have time, can save significant money.

What if I have no credit history at all?

No credit history is different from bad credit, but it creates the same problem: lenders have no way to predict whether you will repay. FHA loans are more flexible with this situation than conventional loans. You may be able to use alternative credit — rent payments, utility bills, or insurance payments — to show a history of on-time payment. Talk to an FHA lender about your specific situation before assuming you cannot buy.