If you’re in the market to buy a new house, then odds are you’ll be looking at your mortgage options. With the current state of the housing market and the recent rise in average credit score in the US (in 2021 the estimated average score of mortgage borrowers hit 786), you may be wondering if you’ll make the cut. 1
We’ll explain what credit score you need to qualify for different types of mortgages, what exactly lenders are looking for, and how you can prime your credit in the months leading up to your mortgage applications.
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What’s a good credit score for buying a house?
Mortgage lenders generally consider scores at or above 620 to be a good credit score to buy a house. However, there isn’t a universal minimum credit score requirement in the mortgage industry, and you can still get a mortgage with a lower credit score. Some choosier lenders might also require a higher one.
Because credit scores are an assessment of your creditworthiness, it shouldn’t come as a surprise that a higher score will get you better loan options. However, credit score requirements for home loans vary depending on the type of loan you apply for, the lender you choose, and your overall financial profile.
Minimum credit score to buy a house by loan type
What credit score you need to have to qualify for a mortgage depends on whether you’re applying for a private loan or a government-backed loan. Government loans generally have lower credit score requirements.
The table below shows the credit score you should shoot for to get various types of mortgages.
Minimum Credit Score Required for Different Types of Mortgages
|Loan Type||Minimum FICO Credit Score|
|FHA loan (government-backed)||580 with a 3.5% down payment
500 with a 10% down payment
|VA loan (government-backed)||No set minimum, but generally 580–620|
|USDA loan (government-backed)||No set minimum, but 640 is required for streamlined application processing|
|Jumbo loan||700 to 740 (depending on the loan amount)|
Sources: US Department of Housing and Urban Development, US Department of Veterans Affairs, Fannie Mae, Freddie Mac, United States Department of Agriculture, Caliber Home Loans, Quicken Loans, and Rocket Mortgage.
To put those numbers into context, they largely fall into the range of Fair and Good credit scores in FICO’s scoring model:
FICO Credit Score Classifications
The upshot is that unless your score is classified as Poor (within the red zone), you’ll probably be able to qualify for a mortgage of some type.
If the loans in the table above don’t mean much to you, don’t worry. We’ll explain what each type of mortgage is and which one you should plan on applying for in roughly descending order of popularity (with more common loans at the top).
This is the most common type of mortgage. A conventional mortgage is a loan that isn’t government-backed.
In other words, you’ll be borrowing from a non-governmental mortgage lender, such as a bank, credit union, or online lender, and your loan also won’t be guaranteed by any government agency. Loans like this are generally harder to get than government-backed loans.
Conventional loans typically offer the best interest rates, and they generally have 15-year or 30-year repayment periods.
You generally need a credit score of at least 620 to get a conventional mortgage. This is because after a mortgage lender issues a loan to a borrower, they often sell it to Fannie Mae or Freddie Mac, and both of these companies have a minimum credit score requirement of 620. 2 3 4
With that said, you might still be able to get a conventional mortgage with a lower credit score if you provide “nontraditional credit data” (in the FHFA’s own words) or you’re planning on refinancing under the Refi Plus/DU Refi Plus Home Affordable Refinance Program (HARP). 5
An FHA loan is a type of government-backed loan that’s insured by the Federal Housing Administration (FHA), meaning that the FHA protects your lender against loss if you default on your mortgage. This makes it easier to qualify for an FHA mortgage than a conventional loan.
Although the minimum credit score needed for an FHA loan is low, a higher score makes you eligible for a lower down payment. Here’s what score you’ll need: 6
FHA loans are attractive for first-time home buyers because of their minimal credit requirements and low closing costs. To get an FHA mortgage, you won’t apply directly to the Federal Housing Administration—instead, you’ll need to apply through an FHA-approved mortgage lender.
A VA loan is insured by the US Department of Veterans Affairs. To qualify, you must be a current or former member of the US Military or National Guard or be the spouse of a military member who died on duty or who was discharged due to a service-related disability. 7
VA mortgages have the following benefits: 8
- No down payment (unless required by the lender)
- No mortgage insurance requirement
- Low interest rates
- VA staff assistance if you’re delinquent on your loan
However, be prepared to pay a one-time upfront funding fee, unless you’ve received VA disability compensation. While there isn’t a government-set minimum credit score requirement for VA loans, lenders set their own minimum credit scores, which often range from 580 (e.g., Caliber Home Loans) to 620 (e.g., Quicken Loans).
A USDA mortgage is insured by the United States Department of Agriculture (USDA). This type of loan is designed for low-income borrowers living in a qualifying rural, small-town, or suburban area. These mortgages don’t require a down payment (though you’ll still have to pay closing costs). 9
Like VA loans, USDA loans have lower interest rates than conventional loans and don’t have a government-set minimum credit score either. However, if you don’t have at least a 640 credit score, you won’t qualify for streamlined credit processing, and you’ll instead need to meet other requirements. 9
The USDA offers three main mortgage programs:
- USDA Guaranteed Loan Program: Loans issued by participating lenders for borrowers with income below 115% of the median household income.
- USDA Direct Loan Program: Loans issued by the USDA for qualifying low-income borrowers. They aim to help applicants repay their loans by reducing their mortgage payments for a while.
- USDA Home Repair Program: Loans issued by the USDA for qualifying low-income homeowners to improve or repair their homes.
A jumbo loan is a type of mortgage offered by private (non-government-backed) lenders. They’re specifically designed for people who want to borrow more than the “conforming loan limit” set by the Federal Housing Finance Agency—in other words, people who want unusually large mortgages.
Since there’s more risk involved for lenders, jumbo loans often have higher interest rates than conventional conforming loans. They also generally require a larger down payment and a credit score of at least 700.
Can you get a mortgage with a bad credit score?
Yes, you can get a mortgage with a bad credit score, although your options will be limited. As is the case with other types of installment loans, if you have poor credit, you’ll probably only qualify for mortgages with high interest rates and large down payments.
Your best bet is to start by looking into government-backed loans (e.g., FHA, USDA, and VA loans) because their score requirements tend to be less strict.
Make sure you don’t have any negative items in your credit history that will disqualify you:
Disqualifying Factors for Government Loans
|FHA Loans||VA Loans||USDA Loans (Streamlined Processing)|
What should you do if your credit history disqualifies you from getting a mortgage?
If you don’t qualify for any private or government-backed mortgages, then you could ask a family member or close friend to cosign your loan. This means they’re assuming responsibility for the loan if you default on it (aka stop paying it), which will cause many lenders to relax their requirements.
However, this is a huge responsibility. In many cases, you’ll be better off waiting to buy a home until you’ve taken steps to rebuild your credit.
How to improve your credit score to buy a house
If you don’t have a high enough credit score to buy a house, taking steps to improve your credit score is definitely worthwhile. (Actually, given the many benefits of having good credit, it’s worthwhile even if you’re not currently in the market for a mortgage.)
Even though it’s impossible to raise your credit score by 100 points overnight, you’ll eventually meet the credit requirements for a mortgage if you practice good financial management and follow these tips:
- Dispute errors on your credit reports: Check your credit report for inaccurate information that’s dragging your score down. If you spot any errors, immediately file a credit dispute, which you can do with our free credit dispute letter template.
- Bring past-due accounts current: Pay off your debts in collection or charge-offs if you have any, as they can cause significant damage to your credit score. If you already have a loan and you’re behind on your payments, then getting current will also help show that you can handle a new financial responsibility.
- Make on-time payments: Your payment history is the largest factor affecting your credit score, so always paying your bills on time can greatly benefit your score and boost your odds of getting approved for a mortgage.
- Get a credit-builder loan: If you have an insufficient credit history or no credit score at all, then getting a credit-builder loan can help round out your credit profile and look much more attractive to lenders. This is especially true if you only have revolving credit accounts (aka credit cards) and have never taken out a loan.