Average Credit Score for a Mortgage: How It Affects What You Qualify For

Your credit score represents your financial history and creditworthiness and plays a role in your mortgage eligibility. For example, you may qualify for a lower rate with a credit score of 750 than with a score of 650, saving you thousands of dollars over the life of the loan. According to the Federal Reserve Bank of New York, two-thirds of newly originated mortgages went to borrowers with credit scores of at least 760.

We'll explore how your credit score for a mortgage affects the rates you're offered, the typical mortgage values associated with different score ranges and what you can do to improve your standing.

Your mortgage credit score plays a significant role in determining which types of loans you qualify for. Higher scores typically give you access to more favorable loan terms. In comparison, lower scores may limit your options or require higher down payments. 
 

Lenders assess your creditworthiness to decide whether you’re a good candidate for a conventional and an FHA loan. Here’s a breakdown of how different credit score ranges affect your mortgage eligibility:

Your credit score for a mortgage directly influences the interest rates lenders offer. Higher scores generally indicate lower risk to lenders, which means you can secure a lower interest rate. On the other hand, a lower score signals more risk, often resulting in higher rates that increase the total cost of the loan over time.

While credit scores primarily affect interest rates but also how much you can borrow. Lenders use your credit score alongside your loan-to-value (LTV) ratio and debt-to-income (DTI) ratio to determine the loan amount you're eligible for, with higher scores often leading to more favorable terms.

If you're considering a 30-year fixed mortgage in New York, a credit score of less than 680 qualifies you for an average APR of 8.0% and a monthly payment of $1,836.15. However, if your credit score is 740 or higher, the average APR drops to 6.6%, and your monthly payment decreases to $1,598.30.

You could save $237.85 each month by improving your credit score to over 740. Over the life of the loan, this adds up to a total interest savings of $85,628.12. These figures highlight the financial benefits of maintaining a high credit score, making your mortgage more affordable in the long run.

For those exploring 30-year fixed rate loans, the average APR as of December 2024 is 6.8%. While your credit score for a mortgage plays a significant role in determining your rate, your location also matters. In this case, you need a credit score of 740 or higher in all states to qualify for APRs close to the national average.

Turning to 15-year fixed rate loans, the average APR is 6.1% as of December 2024. States like New Hampshire, Idaho and New York allow you to qualify for rates near this average with a credit score ranging from 680 to 740. Interestingly, you can secure a rate close to the national average in 12 states, including Wyoming, Arkansas and Hawaii, even with a credit score of less than 680. For the rest, a score of 740 or higher is necessary to get the best rates.

The average credit score for a mortgage varies across states, with Mississippi at 680 and Minnesota at 742. Understanding these differences can help you gauge where you stand in terms of securing a good credit score.

According to the New York Federal Bank's report for Q2 of 2024, the median credit score for new mortgage originations is 772. Unlike the average, the median isn't skewed by extremely high or low scores, giving you a clearer picture of typical scores. For example, if home values in your area are high, a median score better reflects the creditworthiness needed for a mortgage.

Its third quarter report shows that 3.5% of new mortgage borrowers have credit scores below 620, while 65.8% have scores above 760. This suggests a trend toward higher creditworthiness among new mortgage applicants.

Improving your credit score for a mortgage can open up opportunities for better rates and terms. Whether you're building credit or recovering from past issues, there are simple actions you can take to boost your score.

Your credit score plays a significant role in your mortgage application process, affecting everything from your loan amount to your rates. Below, we’ve answered some common questions about how your credit score impacts your mortgage options.