What Credit Score Do You Need to Buy a House? A Complete Guide

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Switching from renting to owning a home requires a satisfactory credit history, but what credit score do you need to buy a house? Loan program requirements range from no minimum for VA loans, to 620 for standard conventional loans. However, lenders can require higher scores for loans they make.

What Credit Score Do You Need To Buy a House?

The credit score needed to purchase a home can depend on several factors, such as the type of loan you are applying for and what that loan requires. Four common types of loans include:

• Conventional loan
• FHA loan
• VA loan
• USDA loan

Conventional Loan 

Loans that aren’t guaranteed or backed by any government program are considered conventional loans. These are the most popular mortgage loans. Conventional loans are best for those with higher credit scores and enough cash to buy a home with at least 5% down — although programs for lower-income borrowers allow just 3% down.

The minimum credit score for a conventional loan is 620. However, borrowers’ average credit scores are much higher, and some lenders require higher scores for loan approval. You’ll need a score in the upper 700s to qualify for the best rates.

You can reduce loan costs further by purchasing your home with 20% down to avoid having to pay for private mortgage insurance.

FHA Loan

An FHA loan is backed by the Federal Housing Administration. This loan is intended to provide mortgages to those with lower incomes and lower credit scores than conventional loans allow.

You could qualify for an FHA loan with a credit score as low as 500 if you have a 10% down payment. Keep in mind, a higher score will save you money.

In addition to being able to buy with just 3.5% down, FHA borrowers with a score of 580 or higher can stop paying mandatory mortgage insurance premiums after 11 years. Borrowers with lower scores pay the MIP for the entire life of the loan.

FHA loans typically have lower rates than conventional loans. That and the more lenient eligibility requirements make FHA loans a popular choice for first-time homebuyers. But the MIP adds significantly to the overall cost of FHA loans.

VA Loan 

If you are a veteran, qualified service member or spouse of a veteran or service member, you could be eligible for a VA loan.

VA loans are unique in that they require no down payment, and the VA doesn’t set a minimum credit score. That leaves credit requirements up to lenders, who generally like to see scores of 620 or higher.

Rates are usually lower on VA loans compared to conventional loans, but VA loans have a funding fee due at closing. The fee varies according to whether you’ve used this VA benefit before and how much you’re putting down, but you can roll it into your loan.

USDA Loan

If you buy a home in an eligible rural or suburban area and your income falls within 115% of the median income for that area, you could qualify for a USDA loan. The main benefit of these loans is that they let you buy a home with no money down.

The USDA doesn’t set a minimum credit score for the loans it backs. Lenders do, however, and you’ll typically need a score of at least 640 to be approved.

Although USDA loans don’t require mortgage insurance, they do have an upfront guarantee fee, which usually is rolled into the loan. The annual loan is usually paid in monthly installments with their mortgage payments. Another downside is that buying with no money down puts USDA borrowers at increased risk of winding up underwater (i.e., owing more on the homes than the homes are worth) or losing their homes to foreclosure.

Understanding the Role of Credit Scores in Home Buying

Lenders take on a lot of risk when they issue a mortgage loan — they have to trust that borrowers will pay back hundreds of thousands of dollars in on-time payments every month, usually for 30 years. Credit scores, which are calculated from borrowers’ credit histories, tell lenders how well prospective borrowers manage credit. This shows how likely they are to meet their obligations to the lender.

FICO scores, for example, take into account the following, listed in order of impact:

• Debt payment history
• How much debt you owe
• The length of your credit history
• How much new credit you’ve taken out
• How many types of credits you have

Borrowers with high scores are less risky, so lenders can offer them lower rates. Lower credit scores, even if they don’t disqualify borrowers, usually result in a higher rate and can even result in higher fees.

How Your Credit Score Affects Mortgage Rates

Lenders have a couple of credit scoring models to choose from, and each one has slightly different ways of calculating scores. But the most-used model, FICO, categorizes its scores by ratings that can give you insight into how lenders view scores:

• Exceptional: 800 and up
• Very good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: Below 580

The MyFICO website provides a loan savings calculator. You can use this tool to compare the rate you might receive on a 30-year fixed-rate conventional mortgage loan based on the state where you live and the amount you want to borrow.

As of March 10, 2025, the calculator, citing data from Curinos LLC, shows the following rates:

• 6.942% for a borrower with a score in the 760-to-850 range.
• 7.183% for a borrower with a score in the 700-to-759 range.
• 7.307% for a borrower with a score in the 680-to-699 range.
• 7.372% for a borrower with a score in the 660-to-679 range.
• 7.491% for a borrower with a score in the 640-to-659 range.
• 7.649% for a borrower with a score in the 620-to-639 range.

Based on a $300,000 loan amount, the difference in rates results in a monthly mortgage payment that’s $146 higher for the borrower with the lower score. That doesn’t sound like much. But when you look at how that affects your total interest payments after 30 years, the difference is staggering.

The lower score would cost you over $53,000 more than you’d pay with a score of 760 or more. Even a small improvement, say to the 640-to-659 range, would save you $32 per month on your payments and over $11,550 in total interest.

How To Improve Your Credit Score Before Buying a Home

Your payment history and your utilization rate — the amount of available credit that you’re currently using — are the biggest factors affecting credit scores. The best ways to increase your credit score before you apply for a mortgage would be paying bills on time and paying down your balances.

Other steps you can take include:

• Checking your credit report for errors, and correcting errors and outdated negative entries if you find them. AnnualCreditReport.com makes it easy to request free credit reports from each of the three major credit bureaus. You can get updated reports weekly.
• Having your rent, utility and cell bills reported to the credit bureaus using a service like Experian Boost — but only if you pay them on time each and every month.
• Avoid applying for or accepting new credit. Hard inquiries cost you several points on your credit score. The impact can last for a full year, and inquiries remain on your credit report for two years, according to Experian.

What To Do if Your Credit Score Is Too Low for a Mortgage

If you don’t qualify for a mortgage, you should hold off buying a home until you’ve improved your credit and resolved the circumstances that damaged your score. While you do have other options for purchasing sooner, they’re risky, and in the long run, they might cost you far more than you’ll save by eliminating rent.

Alternative Loans

Conventional, FHA, VA and USDA loans all follow federal guidelines meant to ensure that only qualified borrowers receive mortgage loans. But some lenders offer non-qualified mortgage loans that don’t adhere to those standards, so they can loan money to higher-risk borrowers. With that additional risk comes higher interest rates.

Co-Signer or Joint Applicant

A co-signer is someone who applies with you for your mortgage. Spouses often apply jointly, but you can also use a non-occupant co-signer. This could be a parent, grandparent or someone who has good credit and is willing to accept financial responsibility for your loan but who will not live in your home.

Rent-to-Own

With rent-to-own, you sign a sales contract for an agreed-upon price at the same time you sign your lease. Most rent-to-own agreements favor the property owner. They include an upfront option fee that gives the tenant the right to buy the home after a certain period, such as five years. In the meantime, the tenant pays extra money with their rent. The extra amount goes toward their eventual down payment.

Never enter into a rent-to-own agreement without consulting an attorney. If you’re unable to get a mortgage when it’s time to buy, you could lose your option fee plus the money you put toward the down payment.

A much better strategy for most buyers is to ask the owner for the right of first refusal when the owner is ready to sell, and save up down payment money in your own savings account. That way, you get first dibs on the purchase without risking money in the event you still don’t qualify for a mortgage.

Sydney Champion and Caitlyn Moorhead contributed to the reporting for this article.

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