What Credit Score Do You Need to Buy a House?

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Updated: December 12, 2024

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When buying a house, the credit score you need largely depends on your mortgage type. A FICO score of at least 620 is typically required for conventional loans. Still, FHA and other government-backed loans may have lower requirements. 

We’ll break down how credit score requirements differ across loan types and provide actionable tips to improve your score if needed. Understanding how your credit score impacts your mortgage options and rates will help you make informed decisions as you move forward in your homebuying journey.

Key Takeaways

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Conventional loans require a minimum credit score of 620 to buy a house, while FHA loans may accept scores as low as 500 with a larger down payment.

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Your credit score impacts your mortgage interest rate; higher scores lead to lower rates, potentially saving you thousands over the life of the loan.

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Paying down debt and avoiding new credit applications are two effective strategies to improve your credit score before applying for a mortgage.

What Credit Score Do I Need to Buy a House?

Most lenders look for a FICO score of 620 for conventional loans, though requirements vary depending on loan type. Your score is determined by several factors that gauge your creditworthiness. Here’s a breakdown of the components that shape your FICO score:

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    Payment History (35%)

    Lenders want to see whether you consistently pay bills on time. A history of missed or late payments can significantly lower your score.

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    Credit Utilization (30%)

    This measures the percentage of available credit you’re using. Keeping your credit utilization below 30% shows lenders that you manage your credit responsibly and aren’t overextended.

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    Length of Credit History (15%)

    The age of your oldest credit account and the average age of all accounts are considered. A longer credit history can suggest stability and reliability, while newer credit accounts may lower your score.

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    New Credit (10%)

    Each time you apply for new credit, it triggers a hard inquiry, which can slightly reduce your score. Opening too many accounts in a short period signals financial stress to lenders.

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    Credit Mix (10%)

    Having various credit types — such as mortgages, car loans and credit cards — can positively impact your score. It shows lenders you can manage different kinds of debt responsibly.

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FICO VS. VANTAGESCORE: WHICH MATTERS FOR YOUR MORTGAGE?

FICO and VantageScore are both widely used credit scoring models, but when it comes to mortgages, lenders predominantly rely on FICO scores. FICO has been the industry standard for decades, especially for conventional loans.

One key difference is that VantageScore factors in shorter credit histories, which can be beneficial for some borrowers. However, most lenders will still use your FICO score to determine eligibility and rates when you're applying for a mortgage.

What Credit Score Is Needed for Each Loan Type?

Different types of loans have varying credit score requirements for buying a house. Conventional loans, for example, typically have higher thresholds, while government-backed loans like FHA and USDA loans offer more flexibility. 

Below is a comparison of popular mortgage types and the minimum credit score required for each:

Mortgage Type
Definition
Required Credit Score

Conventional Loan

Not insured by the government; conforms to Fannie Mae and Freddie Mac standards. Common for many buyers.

620, though some lenders may require 660

Jumbo Loan

A non-conforming loan for higher loan amounts; not backed by government entities.

700

FHA Loan

Insured by the Federal Housing Administration, ideal for first-time buyers.

500 (with 10% down) or 580 (with 3.5% down)

VA Loan

Backed by the Department of Veterans Affairs, available to military members and their families.

620 (set by most lenders)

USDA Loan

Guaranteed by the U.S. Department of Agriculture for rural areas.

580-620 (varies by lender)

How Your Credit Score Affects Mortgage Interest Rates

Your credit score directly influences the mortgage interest rate you're offered. A higher score often leads to a lower rate, helping you save significantly over the life of your loan. However, mortgage rates also vary between states due to factors like local housing markets and economic conditions.

The rates in the interactive table below are purchase APRs for 30-year fixed-rate mortgages, assuming a down payment of between 5% to 20%. Use this to explore how your credit score and location could impact your mortgage interest rate.

Data filtered by:Results filtered by:
Select
State:New York
Select
Loan Type:30-year Fixed
Select
Down Payment:5% to 20%
680 - 7407.0%
740 or higher6.6%
Less than 6807.5%

Other Factors Lenders Consider Besides Credit Score

While your credit score is important, lenders also evaluate several other factors to assess your mortgage application. These additional criteria help determine your overall financial stability and loan repayment ability. Below are some of the key factors lenders consider:

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    Employment History

    A stable employment history of at least two years with the same employer reassures lenders that your income is reliable. Frequent job changes or gaps in employment can raise concerns about income stability.

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    Income Level

    Lenders want to ensure you have sufficient income to cover monthly mortgage payments. Higher income increases your ability to qualify for larger loans or lower interest rates.

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    Down Payment

    A larger down payment reduces the loan-to-value (LTV) ratio, which can make you a less risky borrower. It may also lead to better loan terms and lower interest rates.

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    Assets and Reserves

    Lenders assess your savings and other assets to ensure you have enough funds for a down payment, closing costs and potential emergencies. More reserves indicate financial security.

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    Loan Type and Amount

    The type of mortgage you apply for and the loan amount can impact the approval process. For instance, jumbo or specialized loans may require stricter qualifications than conventional loans.

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    Debt-to-Income Ratio (DTI)

    Lenders look at your DTI to assess the part of your monthly income that goes toward paying down debts. A lower DTI improves your chances of approval, as it shows you can manage mortgage payments alongside existing obligations.

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Debt-to-Income Ratio Calculator

Provide your income and recurring payments to calculate your DTI.

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Recurring Monthly Debts

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How to Improve Your Credit Score Before Buying a House

If you’re trying to boost your credit score to buy a house, you can implement several effective strategies. These actions can improve your credit standing, making you a more attractive borrower to mortgage lenders. Here are five key strategies to consider:

  1. 1

    Pay Your Bills on Time

    Late payments can significantly damage your credit score. Consistently paying bills on time builds a positive payment history, which makes up 35% of your score.

  2. 2

    Reduce Credit Card Balances

    Lowering your credit utilization ratio by paying down existing credit card debt can improve your score. For the best results, aim to keep your utilization under 10% of your total available credit.

  3. 3

    Avoid New Credit Applications

    Each new credit inquiry lowers your score slightly. Limiting credit applications in the months leading up to your mortgage application can help keep your score higher.

  4. 4

    Check Your Credit Report for Errors

    Regularly review your credit report to catch any errors that may hurt your score. If inaccuracies are found, dispute them to have them removed, which can quickly improve your credit.

  5. 5

    Find a Co-borrower

    If your credit score is lower than desired, adding a co-borrower with a higher score to your mortgage application can improve your chances of getting approved or securing better terms.

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HOW LONG DOES IT TAKE TO IMPROVE YOUR CREDIT?

The time it takes to improve your credit depends on your starting point and the actions you take. For example, correcting an error on your credit report can result in an immediate score boost once it’s resolved. However, paying down credit card balances or consistently making on-time payments might take several months to reflect positively on your score.

If you’re recovering from late payments or high credit utilization, it could take 6 to 12 months to see significant improvement. For those rebuilding from more severe issues like bankruptcy, it may take several years to fully restore your credit.

FAQ: What Credit Score You Need to Buy a House

Understanding the ins and outs of credit scores and mortgages can raise many questions. Below, we've answered some of the most common concerns about credit scores and mortgages and how they impact each other.

Can I get a mortgage with a bad credit score?

How many points can a mortgage raise your credit score?

How can I check my credit score before applying for a mortgage?

Can I buy a house if my credit score is below 600?

After improving my credit score, how long should I wait to apply for a mortgage?

About Zachary Romeo, CBCA

Zachary Romeo, CBCA headshot

Zachary Romeo is a certified Commercial Banking and Credit Analyst (CBCA), and the Head of Loans and Banking at MoneyGeek. Previously, he led production teams for some of the largest online informational resources in higher education, with over 13 years of experience in editorial production.

Romeo has a bachelor's degree in biological engineering from Cornell University. He geeks out on minimizing personal debt and helping others do the same through people-first content.

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