Owning a home is a dream for many, but navigating the world of mortgages and credit scores can feel overwhelming. If you have a 663 credit score, you might be wondering if homeownership is even possible. The good news is, it absolutely is! While a 663 credit score isn’t ideal, it doesn’t automatically disqualify you from buying a house. With the right strategies and loan options, you can still achieve your dream of owning a home.
Understanding the Credit Score Landscape
First, let’s break down what a 663 credit score means in the grand scheme of things. Credit scores range from 300 to 850, with higher scores indicating better creditworthiness. A 663 score falls into the “fair” category, which means you’re not considered a high-risk borrower, but you’re not quite in the prime lending territory either.
Loan Options for Buyers with a 663 Credit Score
You still have access to a number of loan options even with a 663 credit score:
1. FHA Loans:
The Federal Housing Administration (FHA) loan is specifically designed for borrowers with lower credit scores. With an FHA loan, you can qualify for a mortgage with a credit score as low as 580 and a down payment of just 3.5%. This makes FHA loans an attractive option for many first-time homebuyers with less-than-perfect credit.
2 VA Loans:
If you’re a veteran, active-duty service member, or surviving spouse, you may be eligible for a VA loan. VA loans offer several benefits, including no down payment requirement and no private mortgage insurance (PMI) While VA loans don’t have a minimum credit score requirement, most lenders prefer a score of 620 or higher
3. USDA Loans:
The U. S. Department of Agriculture (USDA) offers loans for borrowers in designated rural areas. While there is no minimum credit score needed for USDA loans, most lenders prefer applicants with scores of 640 or above. Additionally, in order to be eligible for a USDA loan, you must meet specific income requirements.
4. Conventional Loans:
While conventional loans typically require a higher credit score of 620 or above, some lenders may consider borrowers with a 663 score, especially if you have other compensating factors like a strong income and low debt-to-income ratio.
Boosting Your Credit Score for Better Loan Terms
Even with a 663 credit score, there are ways to improve your chances of getting a favorable mortgage:
1. Pay Down Debt:
Reducing your debt, especially high-interest credit card debt, can significantly improve your credit score. Aim to pay down as much debt as possible before applying for a mortgage.
2. Become an Authorized User:
If you have a friend or family member with excellent credit, ask if you can become an authorized user on their credit card. This will allow you to benefit from their positive credit history, potentially boosting your score.
3. Dispute Errors on Your Credit Report:
Review your credit report for any errors and dispute them with the credit bureaus. Even small errors can negatively impact your score.
4. Keep Your Credit Utilization Low:
Your credit utilization ratio is the amount of credit you’re using compared to your available credit. Aim to keep this ratio below 30% to demonstrate responsible credit management.
5. Consider a Co-Signer:
If you have a co-signer with good credit, they can help you qualify for a mortgage or secure a better interest rate.
Navigating the Homebuying Journey with a 663 Credit Score
Buying a house with a 663 credit score requires careful planning and preparation. Here are some tips to guide you through the process:
1. Get Pre-Approved:
Before you start house hunting, get pre-approved for a mortgage. This will give you a realistic idea of how much you can afford and help you narrow down your search.
2. Work with a Reputable Lender:
Choose a mortgage lender who specializes in working with borrowers with less-than-perfect credit. They can help you find the best loan options and guide you through the application process.
3. Be Prepared for Higher Interest Rates and PMI:
With a lower credit score, you may have to pay higher interest rates and private mortgage insurance (PMI). PMI is an additional insurance premium that protects the lender if you default on your loan.
4. Make a Larger Down Payment:
If possible, make a larger down payment. This will reduce your loan amount, potentially lowering your monthly payments and improving your chances of approval.
5. Be Patient and Persistent:
Buying a house with a 663 credit score may take longer and require more effort, but it’s definitely achievable. Be patient, persistent, and work with the right professionals to make your dream of homeownership a reality.
Remember, a 663 credit score doesn’t define you as a borrower. With the right strategies and loan options, you can still buy a house and achieve your financial goals.
What is a good credit score to buy a house?
A credit score to buy a house doesn’t have to be perfect. As a matter of fact, 580 is the minimum credit score required to purchase a home, placing it in the “fair credit” range.
With a credit score of 620 or higher, you’re eligible for most types of mortgages. However, mortgage lenders consider more than just your credit score. They evaluate your credit report, your overall debts, and the size of your down payment.
Even if your credit score is lower, you can still qualify for a mortgage by showcasing strength in these areas.
In this article (Skip to…)
What credit score is needed to buy a house?
Depending on the kind of loan and the requirements of the lender, different credit scores are required to purchase a home.
Although there isn’t a single, required credit score to purchase a home, different loan kinds typically require different minimum scores.
You can be eligible for an FHA loan even with a credit score as low as 500 if you can make a 2010 percent down payment. A conventional loan, which is frequently backed by Freddie Mac and Fannie Mae, normally requires a minimum score of 620.
Although there are minimum credit score requirements set by lenders, it’s crucial to keep in mind that having a higher score can increase your chances of obtaining a better mortgage deal.
| Type of Loan | Minimum FICO Score Requirement |
| Conventional mortgage | Typically 620 |
| FHA loan (3.5% down) | Generally 580 |
| FHA loan (10% down) | Usually 500 |
| VA loan | No set minimum by the VA; lenders may have their own requirements. |
| USDA loan | No specific minimum from USDA; most lenders prefer a score of 640 or above. |
| Jumbo loan | Varies based on lenders policy |
When applying for a conventional mortgage, a modest credit score of 620 is usually sufficient, requiring only a 3% down payment.
But, debtors with lower credit scores could pay more for private mortgage insurance (PMI) and interest rates, particularly if their down payment is less than 2020 percent. For conventional borrowers with a credit score in the low 600s and a small down payment, PMI premiums can be substantial. In these situations, FHA loans could provide a more affordable option for homebuyers with average credit scores.
When compared to other loan programs, FHA loans are recognized for requiring the lowest credit scores—FICO scores of 580 and higher are accepted, with only a 3 5% down payment required to buy a house.
While a 2010% down payment is required, some lenders may even take into account a credit score range of 500 to 579 for those who are unsure of the minimum credit score required to purchase a home through this program. These government mortgages are insured by the Federal Housing Administration, which allows lenders to accept borrowers with poorer credit scores or who can only make smaller down payments.
However, FHA loans require both upfront and annual mortgage insurance premiums (MIP). Furthermore, unlike PMI, which is terminated once you have 2020 percent of your home’s equity, MIP is required until you either pay off the loan in full or refinance it for a different kind of loan.
VA loans, backed by the U. S. Department of Veterans Affairs, do not have a set minimum credit score to buy a house. Nonetheless, the majority of lenders require a minimum FICO score of 620, though some will accept as low as 580.
Active-duty service members, veterans, and members of specific other groups can apply for VA loans, which have advantages like extremely low mortgage rates and no continuous PMI (apart from an initial upfront funding fee).
The U. S. Department of Agriculture guarantees the USDA loan, which does not officially require a minimum credit score. However, a FICO score of at least 640 is commonly required by lenders. In order to participate in this program, the buyer must also fulfill specific income requirements and buy a house in a designated rural area.
Due to the larger loan amounts associated with jumbo loans—which surpass the conforming loan limits in the real estate market—having an impact on the credit score required to purchase a home. Lenders typically seek a FICO score of 700–720, though some may consider scores as low as 680. These loans frequently require a down payment of 10% of the loan amount, with home equity playing a crucial role in the borrowing strategy.
660 Credit Score and Below Buying a Home With VA? WATCH THIS NOW
FAQ
Is 663 a good credit score to buy a house?
What is the lowest acceptable credit score to buy a house?
Is 660 credit score good enough to buy a house?
What interest rate can I get with 663 credit score?
Is a 663 credit score a fair score?
Our content is accurate to the best of our knowledge when posted. A 663 credit score is generally a fair score. While a lot of people have fair scores, you may still find it difficult to get approved for credit without high fees and interest rates with a score in this range. “Fair” score range identified based on 2023 Credit Karma data.
Should I buy a home with a 660 credit score?
Lenders will use a decision score of 660 to decide whether to offer you both a loan and determine the terms. A major benefit of buying together is qualifying for a larger loan amount because your combined income is higher than your individual income.
Can you buy a house with a 620 credit score?
With a score above 620, you should have no problem getting credit-approved to buy a house. But remember: Credit is only one piece of the puzzle. A lender also needs to approve your income, employment, savings, and debts, as well as the location and price of the home you plan to buy.
What credit score do you need to buy a house?
No specific minimum from USDA; most lenders prefer a score of 640 or above. For a conventional mortgage, a modest credit score of 620 is typically sufficient, with just a 3% down payment. However, borrowers with a lower credit score may face a higher interest rate and the cost of private mortgage insurance (PMI), especially with less than 20% down.