Buying a house is a huge milestone, and one of the most important factors that will determine your success is your credit score. A good credit score can help you qualify for a lower mortgage rate, which can save you thousands of dollars over the life of your loan.
But what exactly is a good credit score for buying a house? And how can you improve your credit score if it’s not where you want it to be?
The Magic Number: 620
The minimum credit score you need to buy a house is 620. This is the minimum score required for a conventional loan, which is the most common type of mortgage. However, if your credit score is below 620, you may still be able to qualify for a government-backed loan, such as an FHA loan or a VA loan. These loans have lower credit score requirements, but they may come with other restrictions, such as higher down payment requirements.
The Higher the Better
While 620 is the minimum credit score you need to buy a house, a higher credit score is always better. The higher your credit score, the lower your interest rate will be, which can save you a significant amount of money over the life of your loan For example, if you have a credit score of 740, you could qualify for an interest rate that is 0.5% lower than someone with a credit score of 620. This could save you thousands of dollars over the life of your loan
How to Improve Your Credit Score
If your credit score is not where you want it to be, there are a few things you can do to improve it. Here are a few tips:
- Pay your bills on time. This is the most important factor in your credit score. Make sure you pay all of your bills on time, every month.
- Keep your credit utilization low. Your credit utilization ratio is the amount of credit you are using compared to your total available credit. Aim to keep your credit utilization ratio below 30%.
- Don’t apply for new credit too often. Every time you apply for new credit, it results in a hard inquiry on your credit report. Too many hard inquiries can lower your credit score.
- Become an authorized user on a credit card with good credit. This can help you build your credit history without having to open a new credit card.
- Dispute any errors on your credit report. Check your credit report regularly for errors and dispute any that you find.
The Bottom Line
Your credit score is an important factor in your ability to buy a house. The higher your credit score, the lower your interest rate will be, which can save you a significant amount of money over the life of your loan. If your credit score is not where you want it to be, there are a few things you can do to improve it. By following the tips above, you can increase your credit score and make your dream of homeownership a reality.
How Do Lenders Determine Your Credit Score?
Your Credit Profile Excellent 720+ Good 660-719 Avg. 620-659 Below Avg. 580-619 Poor ≤ 579
When do you intend to buy your house? Found a house; signed a purchase agreement; offer pending; will you buy in 30 days, 2 to 3 months, 4 to 5 months, or 6 months from now?
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Are you a first time homebuyer?
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What Is A Good Credit Score To Buy A House?
|
Mortgage Type |
Minimum Credit Score |
|
Conventional loan |
620 |
|
FHA loan (3.5% down payment) |
580 |
|
FHA loan (10% down payment) |
500 – 579 |
|
VA loan |
No industry-standard credit score requirement (Rocket Mortgage® requires a 580 score) |
|
USDA loan |
No industry-standard credit score requirement (most lenders require a 640 score) |
Do You Really Need A Credit Score To Buy A House?
FAQ
Is 700 a good credit score to buy a house?
Is a 720 credit score good enough to buy a house?
What is the minimum credit score to buy a house?
Can you buy a house with a 600 credit score?
What credit score do you need to buy a house?
Whether your credit is flawless or average, here’s what to expect when you apply for a mortgage. The minimum credit score to buy a house is generally 620, but it can vary depending on the kind of loan you’re seeking.
What is a good credit score for a home loan?
Generally speaking, you’ll likely need a score of at least 620 — what’s classified as a “fair” rating — to qualify with most lenders. With a Federal Housing Administration (FHA) loan, though, you might be able to get approved with a score as low as 500.
What credit score do you need to get a mortgage?
Conventional. For fixed-rate loans, you should have at least a 620 credit score to qualify for a conventional loan. For adjustable-rate mortgages (ARM), you’ll need at least a 640. Federal Housing Administration (FHA). If you have at least a 10% down payment, you can get an FHA loan if your credit score is less than 580.
Can you buy a house with a low credit score?
Certain loan types even allow you to buy a house with a credit score as low as 500. It’s possible to buy a house with a wide range of credit scores, but the higher your credit score, the more likely you’ll be able to secure more favorable loan terms with your lender.