hand holding lots of credit cards for topic credit score to buy a house

Do You Have the Credit Score To Buy a House?


What You Need To Know

  • Your credit score is a number ranging from 300 to 850 that represents your creditworthiness
  • A higher score means you’re more likely to qualify for a mortgage and get lower mortgage rates
  • With a lower credit score, you may still qualify for an FHA or a VA loan


Ready to buy a house? Well, besides finding a property you like, you’ll need to get ready for all the mortgage process stuff that comes along with it. Start by figuring out if you qualify for the homes you’re looking at and by being very real about your finances.

One of the first things a lender will ask as you start the preapproval process is, “What is your credit score?” Understanding this piece of the puzzle allows you to understand what you are realistically qualified for and what you can do to get the best terms possible.

What Is My Credit Score?

A credit score is a number ranging from 300 to 850. It’s designed to be a simple representation of your creditworthiness. Think of it as your financial health. It’s how lenders will determine if you’re healthy enough to qualify for their services (and money).

When it comes to credit scores, we aren’t talking golf rules (for fans of the sport). Lower is definitely not better. In fact, the higher your score, the more people will trust you when you borrow money from them. It represents how you’ve handled borrowing money and making payments for everything from your car to your cellphone bills.

What determines my credit score?

Using information from lenders, banks and other companies, the three credit reporting agencies (Equifax®, Experian™ or TransUnion®) build a credit report and a credit history to determine your score based on:

  • Payment history: Do you consistently pay bills on time? Even your phone bill?
  • Credit utilization: How much do you owe vs. how much you can borrow? If you’ve maxed out your only credit card, chances are your credit utilization is pretty high.
  • Derogatory marks: No, this isn’t your 4th-grade report card come back to haunt you. If you’ve ever had accounts go to collections, filed for bankruptcy or had a foreclosure or tax lien on a property in your name, that becomes a derogatory mark on your credit report.
  • Number of accounts: While you might think applying for a bunch of credit cards to increase your available credit sounds like a good idea, it actually isn’t. Opening too many accounts too quickly may be a sign that you can’t manage your debt – or it’s a red flag for identity theft or fraud – and lenders aren’t fans of red flags.
  • Credit history: In other words, how experienced are you with managing debt? Like a fine wine, your credit score gets better as your accounts age.

Usually, your credit score is calculated using either the FICO® or VantageScore® scoring system and is reported by one of three credit bureaus mentioned above.

You can check all of your scores using this free tool once every 12 months, so add an alert to your phone. Your bank may also offer a free credit monitoring service, allowing you to stay on top of your score.

What Is a Good Credit Score To Buy a House?

There’s no definitive answer to this, but there are a few golden numbers to aim for when it comes to making sure you have a credit score that will qualify for the best loan terms. Different lenders have different standards, and there’s lots of other factors at play, but expect needing to meet these minimum credit score requirements to qualify:

Mortgage Loan TypeMinimum Required Credit Score
FHA580 with 3.5% down or 500 with 10% down
VANo minimum, but most lenders prefer 580

Conventional mortgages are the standard home loans offered by most banks and non-bank lenders. While these conventional loans conform to government standards set by Fannie Mae and Freddie Mac, the agreements are strictly between you and the lender. While every lender has different standards, most lenders will divide you into these three tiers depending on your credit score:

  • Excellent: 740+
  • Good: 670 to 739
  • Fair: 620 to 669

BTW, as of 2021, the average credit score in the U.S. was 711.

Which tier you fall into will determine:

  • Your mortgage interest rate
  • The % of the home’s purchase price you’ll need to put toward a down payment
  • What you’ll pay in private mortgage insurance (PMI) – if you can’t put down 20% of your home’s purchase price

The better your credit score, the easier the mortgage process will be. Sometimes, it might be worth holding off on that home purchase to prioritize building up your credit score. The lending team may not need to ask for as much paperwork, and your mortgage lender may be more willing to negotiate on settlement costs and other aspects of the mortgage.

Jumbo loans

Housing prices skyrocketing in your area? Looking to see if you qualify for that million-dollar listing? If you want to borrow more than the Federal Housing Finance Agency limit of $548,250 (or $822,375 in certain high-cost areas) you’ll need a jumbo loan. Each lender may have different criteria to qualify for these larger loans but will typically look for a credit score of 680 or higher.

FHA loans

If you don’t have a credit score of 620 or higher, there are still options. Federal Housing Administration (FHA) mortgages will often accept credit scores as low as 500, though most lenders require a credit score of 580 or higher.

These loans are issued through regular lenders but backed by the federal government. They’re designed to help first-time home buyers and borrowers with debt, lower credit scores or a bankruptcy or past financial issue on their record. To qualify for FHA loans, you’ll need:

  • 2 years of verifiable employment history
  • An established credit history
  • 3.5% down with a credit score of 580 or higher or 10% down with a credit score of 500-579

VA loans

As a veteran of the U.S. Armed Forces, you may be eligible for a Department of Veterans Affairs (VA) loan to buy, build or improve a home, or refinance your current mortgage. A huge perk of VA loans is that you won’t be charged for private mortgage insurance, though you may pay a one-time upfront fee (VA funding fee) that can be included in your closing costs. Many veterans are eligible for a funding fee waiver, so check with your lender or the VA when applying for a VA loan.

There is no minimum credit score and no down payment required to qualify for a VA loan. However, individual lenders can set their own minimums for approval. Most lenders prefer a credit score of 580 or higher.

What If I Have a Low Credit Score?

The good thing about credit scores is that they can change over time. And while your credit score may be low today, an actionable strategy can help improve this.

Credit scores can be improved when you:

  • Pay your bills on time and in full
  • Pay down existing debt, especially high-interest credit card debt
  • Combine high-interest debt (like credit cards) into one lump sum with a lower-interest credit card, personal loan or home equity loan
  • Increase your income by finding higher-paying work or taking on extra work
  • Tackle any red flags on your credit report, like signs of fraud
  • Build your credit history by signing up for credit cards and using them responsibly
  • To improve your credit score, go beyond Google, talk to a financial planner or a nonprofit credit counselor

In the short-term, if you know someone with excellent credit, usually a parent, sibling or close friend, they may be able to improve your chances of getting approved for a mortgage by acting as a co-signer. But this means their credit will be impacted by your repayment actions, so everyone involved should be comfortable assuming the risks.

Credit Score Knowledge Is Power

When looking for a mortgage – or any type of loan – knowing your credit score is power. Most banks and credit card providers will share it with you for free, and you can request a free annual credit report from the three major reporting agencies. If you’ve got space on your phone, there are free apps you can get that give you daily updates on your credit.

Armed with all of this information, you’re now realistically prepared to see what kind of mortgage terms lenders will offer you. You are more than prepared to determine what kind of loan is best for you. And you know how to improve your credit score before you commit to a mortgage lender.

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In Case You Missed It


  1. Your credit score can affect whether you qualify for a mortgage, your interest rate and the complexity of the mortgage approval process
  2. Different lenders have different standards, but a conventional mortgage usually requires a score of 620 or higher
  3. You can improve your credit score over time. If you need a short-term assist, consider a government-backed mortgage or finding a co-signer

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