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The minimum credit score needed to buy a house can range from 500 to 700, but will ultimately depend on the type of mortgage loan you're applying for and your lender. While it's possible to get a mortgage with bad credit, you typically need good or exceptional credit to qualify for the best terms.
Read on to learn what credit score you'll need to buy a house and how to improve your credit leading up to a mortgage application.
What Credit Score Do I Need to Buy a House?
There are several types of mortgage loan programs, and each one has its own minimum credit score requirement. Additionally, individual lenders may have stricter criteria when evaluating your creditworthiness. That said, here's a quick summary of what you can expect:
| Minimum Credit Scores by Home Loan Type | |
|---|---|
| Loan Type | Minimum Credit Score |
| Conventional loan | 620 |
| Jumbo loan | 700 |
| FHA loan | 500 |
| VA loan | 620 |
| USDA loan | 580 |
Conventional Loans Minimum Credit Score: 620
Conventional loans typically require a minimum credit score of 620, though some may require a score of 660 or higher. These loans aren't insured by a government agency and conform to certain standards set by the government-sponsored entities Fannie Mae and Freddie Mac. They're by far the most commonly used mortgage loans.
Jumbo Loans Minimum Credit Score: 700
A jumbo loan is a type of conventional loan that doesn't meet the requirements to be a conforming loan, particularly due to a higher loan amount. In general, lenders require a credit score of 700 or higher for jumbo loans.
FHA Loans Minimum Credit Score: 500
Insured by the Federal Housing Administration, FHA loans have a minimum credit score of 500 if you make a 10% down payment on your purchase. If you put down less than that, the minimum credit score required is 580.
VA Loans Minimum Credit Score: 620
There's no minimum credit score set by the U.S. Department of Veterans Affairs, but lenders who provide VA loans typically require a score of 620 or higher. VA loans were created for select members of the military community, their spouses and other eligible beneficiaries.
USDA Loans Minimum Credit Score: 580
Insured by the U.S. Department of Agriculture, USDA loans don't have a minimum credit score set by the federal agency, but lenders may require a score of at least 580 to 620. These loans are meant for low- and moderate-income homebuyers looking to purchase a home in rural areas.
How Your Credit Score Affects Mortgage Rates
Your credit score is a crucial factor in determining your eligibility for a mortgage loan. But while meeting the minimum score requirement can help you get approved, it may not be enough to make your monthly payment affordable.
If your credit score is in great shape, you may have several different loan types to choose from, as well as a good chance of securing a low interest rate. With that in mind, here's the average mortgage rate by FICO® Score☉ range, as of mid-July 2024:
| FICO® Score Range | Average Interest Rate |
|---|---|
| 760 — 850 | 6.237% |
| 700 — 759 | 6.459% |
| 680 — 699 | 6.636% |
| 660 — 679 | 6.85% |
| 640 — 659 | 7.28% |
| 620 — 639 | 7.826% |
Source: myFICO
Borrowers with higher credit scores also tend to take out larger loans. Here's a breakdown of consumers' average mortgage balance based on FICO® Score ranges, as of September 2023:
| FICO® Score Range | Average Mortgage Balance |
|---|---|
| 800 — 850 | $256,897 |
| 740 — 799 | $256,087 |
| 670 — 739 | $236,807 |
| 740 — 799 | $194,433 |
| 800 — 850 | $180,584 |
Source: Experian
Other Factors Mortgage Lenders Consider
Although your credit score is crucial, it's just one of many aspects of your creditworthiness. Here are some other factors that lenders will look at to determine your eligibility and loan terms:
- Credit history: Your credit score provides lenders with a quick snapshot of your overall credit health, but it doesn't tell the whole story. Lenders will also review your credit reports for any items that could be red flags, such as a foreclosure or bankruptcy.
- Debt-to-income ratio: Lenders will also calculate your debt-to-income ratio (DTI) by dividing the sum of your monthly debt payments by your gross monthly income. Generally speaking, you'll want a DTI below 43%. A ratio that's on the higher end could prevent you from borrowing what you need for your dream home.
- Work history: In addition to your income, home lenders will also consider your work history. For example, if you've been in the same salaried position or industry for a long time, you may have better odds of getting good terms than someone with a spotty job history or who is self-employed with irregular income.
- Down payment: A home down payment is essentially your skin in the game and helps reduce the risk of default. A higher down payment can help make up for a lower credit score and can even qualify you for a lower interest rate. If you put down 20% or more on a conventional loan, you won't have to pay for private mortgage insurance.
- Assets: Lenders may take a look at your assets to evaluate how financially stable you are in general. They may also want you to have some cash reserves in place after your down payment and closing costs.
Can You Get a Mortgage With a Bad Credit Score?
It's possible to get approved for a mortgage with poor credit. But just because you can, it doesn't necessarily mean you should because even a small increase in your interest rate can cost you tens of thousands of dollars over the life of a mortgage loan. If you're not in a rush and can take time to improve your credit before applying for a mortgage, it could be well worth it (more on this below).
If you're set on buying a home soon and you have bad credit, here are a few tips that can help you potentially score a decent interest rate:
- Consider an FHA loan. With 10% or more down, you could get approved with a score as low as 500.
- Minimize other risks. Options may include making a larger down payment, paying down credit card balances to reduce your credit utilization rate or paying off other debts to lower your DTI.
- Shop around. Take some time to get preapproved with multiple lenders to get an idea of what's available based on your credit situation. You could even consider working with a mortgage broker who may be able to match you with a specialized loan program.
- Get a cosigner. Consider asking someone with good or exceptional credit to apply with you as a cosigner. Just make sure you discuss the implications of cosigning a mortgage loan before you proceed.
There's no guarantee that these actions will help you qualify for a mortgage loan with good terms, but they can improve your odds.
Learn more >> How to Get a Home Loan With Bad Credit
How to Improve Your Credit Before Getting a Mortgage
Whether you're thinking about buying a home soon or further down the road, it's worth spending some time getting your credit ready before you officially begin the process. Here are actions you can start taking now, some of which can improve your credit score relatively quickly.
1. Check Your Credit Score
Knowing where you stand is the first step to preparing your credit for a mortgage loan. You can check your FICO® Score with Experian for free, and then evaluate your next steps. If your credit score is low enough that you risk getting approved with unfavorable terms or denied altogether, you'll be better off waiting until you can make some improvements.
You can get a free copy of your credit report anytime from Experian, or from each of the three national credit reporting agencies weekly at AnnualCreditReport.com. Review your reports to identify areas where you can improve. If you find inaccuracies, you have the right to dispute them with the credit bureaus.
2. Pay Down Debt
Paying off debts can not only lower your DTI but also help improve your credit score, primarily by reducing your credit utilization rate on your credit cards.
Because your credit utilization rate is calculated each month when your credit card balances get reported to the credit bureaus, your credit score could respond quickly if you pay down high credit card balances.
Additionally, if you pay off loans or pay down the balance to the point where you have 10 or fewer payments left, the lender can remove the payment from your DTI calculation.
3. Avoid Applying for New Credit
Applying for and opening new credit accounts not only impacts your credit score but can also increase your DTI. As a result, many mortgage lenders prefer that you don't apply for credit in the months leading up to your mortgage application and also throughout the mortgage process.
If you need to apply for credit, prepare to explain your reasoning. Even with a good reason, however, it could impact your approval odds.
4. Minimize Spending
Cutting back on your spending can boost your savings and also help keep your credit utilization rate down. Take a look at your budget and identify areas where you can reasonably pare back on your expenses as you work to prepare for your mortgage application.
5. Pay All Bills on Time
Your debt payment history is the most important factor of your FICO® Score, and even one late payment can do serious damage to your score. If you've had trouble paying on time in the past, try putting your bills on autopay so you never miss a payment. Just be sure you have enough money in your bank account to cover your bills.
Learn more >> How to Improve Your Credit Score Fast
Estimate Your Monthly Mortgage Payment
Experian's mortgage calculator can help you estimate what your monthly payment will be based on a handful of assumptions. As you prepare your credit and budget for a monthly housing payment, use this calculator to evaluate how much you can afford to spend.
Mortgage Calculator
†The information provided is for educational purposes only and should not be construed as financial advice. Experian cannot guarantee the accuracy of the results provided. Your lender may charge other fees which have not been factored in this calculation. These results, based on the information provided by you, represent an estimate and you should consult your own financial advisor regarding your particular needs.
Try the full Mortgage Calculator Opens a new window with more features.
Frequently Asked Questions
While you can get approved for a mortgage loan with a 620 credit score—and even lower in some cases—it's generally best to have a score in the mid-to-upper 700s. Having a higher credit score can help you secure a lower interest rate and monthly payment.
The right amount for you to save is based on your ability to save and your financial goals. Down payment requirements can vary depending on the type of mortgage loan you choose, but they typically range from 0% to 5%. That said, there are several benefits associated with a larger down payment, including reduced interest rates, lower monthly payments and possibly skipping mortgage insurance requirements.
Think About More Than Just the Loan Terms
A mortgage is a long-term financial commitment. But getting into a home with less-than-perfect terms now can still make sense in certain situations.
If you live in an area where a mortgage payment would be cheaper than what you pay in rent, for example, even a loan with a slightly higher interest rate could save you money in the short term. And if owning your own home improves your overall quality of life, that could be worth paying a little more.
Whatever you do, make it a priority to put your credit history in order before you apply, and continue to monitor your credit after you buy to continue to build and maintain good credit.