A good credit score to buy a house is 700 or higher for favorable rates, though you can qualify with as low as 500 (FHA with 10% down) or 620 (conventional). A 740+ score gets the best mortgage rates, saving tens of thousands over the loan term. Each 20-point increase in your score can reduce your rate by 0.125-0.25%.
Credit Score Requirements by Loan Type
Different loan programs have different minimums.
Minimum Credit Scores
| Loan Type | Minimum Score | Notes |
|---|---|---|
| Conventional | 620 | 740+ for best rates |
| FHA (3.5% down) | 580 | Most common option |
| FHA (10% down) | 500 | Limited lenders |
| VA | No minimum | 620 typical lender requirement |
| USDA | 640 | For automated approval |
| Jumbo | 700-720 | Varies by lender |
Lender Overlays
While these are program minimums, many lenders set higher requirements called “overlays”:
- FHA advertised minimum: 580
- Most FHA lenders require: 620-640
- VA has no minimum, but lenders require: 620-660
Shop multiple lenders if your score is near the minimum. Some specialize in lower-credit borrowers.
How Credit Score Affects Your Interest Rate
Your score directly impacts your rate—and your monthly payment.
Rate by Credit Score (30-year conventional)
| Credit Score | Typical Rate | Rate Difference |
|---|---|---|
| 760+ | 6.50% | Baseline (best) |
| 740-759 | 6.625% | +0.125% |
| 720-739 | 6.75% | +0.25% |
| 700-719 | 6.875% | +0.375% |
| 680-699 | 7.00% | +0.50% |
| 660-679 | 7.25% | +0.75% |
| 640-659 | 7.50% | +1.00% |
| 620-639 | 7.75% | +1.25% |
Real Dollar Impact
$350,000 loan, 30-year fixed:
| Score | Rate | Monthly P&I | Total Interest | Extra vs 760 |
|---|---|---|---|---|
| 760+ | 6.50% | $2,212 | $446,320 | — |
| 720 | 6.75% | $2,270 | $467,200 | $20,880 |
| 680 | 7.00% | $2,329 | $488,440 | $42,120 |
| 640 | 7.50% | $2,447 | $531,920 | $85,600 |
| 620 | 7.75% | $2,508 | $553,880 | $107,560 |
A 620 score costs $296 more per month and $107,560 more over the loan than a 760 score.
PMI Impact
Credit score also affects private mortgage insurance rates:
| Score | PMI Rate (5% down) | Monthly on $300K |
|---|---|---|
| 760+ | 0.30% | $75 |
| 720-759 | 0.45% | $113 |
| 680-719 | 0.70% | $175 |
| 640-679 | 1.05% | $263 |
| 620-639 | 1.50% | $375 |
Lower scores mean you pay both higher interest AND higher PMI.
What Credit Score Do Lenders Actually Use?
Lenders don’t use the same scores you see on free apps.
FICO Score vs. VantageScore
What you see free: Usually VantageScore 3.0 (Credit Karma, many banks)
What lenders use: FICO Score 2, 4 or 5 (depending on bureau)
Your VantageScore may differ from your FICO by 20-100 points. The free score is directionally helpful but not exact.
Tri-Merge Credit Report
Lenders pull reports from all three bureaus (Equifax, Experian, TransUnion) and use the middle score.
Example:
- Equifax: 695
- Experian: 720
- TransUnion: 708
Your qualifying score is 708 (the middle).
Joint Applicants
For couples applying together, lenders use the lower of the two middle scores.
Example:
- Borrower 1’s middle score: 745
- Borrower 2’s middle score: 685
Qualifying score: 685
This can significantly impact your rate. Sometimes leaving a lower-score spouse off the application makes sense if one income is sufficient.
How to Check Your Mortgage Credit Score
Free FICO Sources
Some banks and credit unions provide free FICO scores:
- Discover (anyone, no account needed)
- Capital One
- Citibank
- American Express
- Many credit unions
Paid Options
myFICO.com: Purchase your actual mortgage FICO scores. Costs $20-40 but shows the exact scores lenders see.
Pre-Approval Check
When you apply for pre-approval, the lender pulls your credit and tells you your scores. This is the most accurate way to know.
Improving Your Credit Score Before Buying
A few months of focused effort can significantly boost your score.
Quick Wins (1-30 days)
Pay down credit cards: Utilization (balance ÷ limit) heavily impacts your score. Get below 30%, ideally below 10%.
Dispute errors: Check all three reports for incorrect late payments, wrong balances or accounts that aren’t yours.
Don’t close old accounts: Average account age matters. Keep old cards open.
Become an authorized user: Being added to a family member’s old, well-managed card can boost your score.
Medium-Term (1-3 months)
Pay all bills on time: Payment history is 35% of your score. Even one 30-day late hurts.
Avoid new credit: Each application creates a hard inquiry. Multiple inquiries lower your score.
Let accounts age: Time heals credit wounds. Negative items matter less as they age.
Longer-Term (3-12 months)
Build positive history: Consistent on-time payments build your profile.
Mix of credit types: Having both revolving (cards) and installment (car loan) accounts helps.
Let negatives age: Late payments, collections and other negatives impact your score less over time.
Score Improvement Example
Jennifer Walsh had a 645 score. Over 3 months:
- Paid credit cards from 65% to 15% utilization: +40 points
- Disputed incorrect collection: +15 points
- Became authorized user on mom’s 10-year card: +20 points
- New score: 720—qualified for much better rates
Score Ranges Explained
Understanding where you stand helps set expectations.
Credit Score Categories
| Range | Rating | Mortgage Outlook |
|---|---|---|
| 800-850 | Exceptional | Best rates everywhere |
| 740-799 | Very Good | Best mortgage rates |
| 670-739 | Good | Good rates available |
| 580-669 | Fair | FHA likely best option |
| 300-579 | Poor | FHA with 10% down or wait |
What Each Range Means for Mortgages
800+: You’ll get every lender’s best rate. Multiple approvals guaranteed.
740-799: Essentially the same as 800+ for mortgages. You’ll get top-tier rates.
700-739: Good rates, though not the absolute best. Very easy approval.
670-699: Decent rates. Conventional possible. FHA works well here.
620-669: Higher rates. Consider FHA for lower rates and easier approval.
580-619: FHA with 3.5% down is your main option. Shop for lenders who accept scores in this range.
500-579: FHA with 10% down. Very limited lender options. May need to wait and improve.
Common Credit Mistakes Before Buying
Avoid these actions while mortgage shopping.
Don’t Open New Credit
New accounts:
- Create hard inquiries (lower score)
- Reduce average account age
- Raise questions during underwriting
Wait until after closing to open new cards or finance furniture.
Don’t Close Accounts
Closing cards:
- Reduces available credit
- Increases utilization ratio
- Shortens credit history
Keep accounts open, even if you’re not using them.
Don’t Make Large Purchases
Big purchases on credit:
- Increase debt-to-income ratio
- May require explanation to lender
- Can disqualify you if DTI goes too high
That new car, furniture or appliances? Wait until after closing.
Don’t Miss Any Payments
Even one 30-day late payment:
- Drops your score 50-100+ points
- Takes 12+ months to fully recover
- May require explanation letter to lender
Set up autopay for everything during the mortgage process.
Don’t Co-Sign for Anyone
Co-signing makes you responsible for that debt. It:
- Increases your DTI
- Adds to your total debt
- Could disqualify you from your home purchase
What If Your Score Is Too Low?
Work on Improvement
If you have time (3-12 months):
- Focus on the strategies above
- Check progress monthly
- Reapply when score improves
Consider FHA
FHA accepts scores as low as:
- 580 with 3.5% down
- 500 with 10% down
Rates may be competitive with conventional for lower-credit borrowers.
Add a Co-Borrower
A co-borrower with better credit can help qualify. Their income and credit count too. But if their score is lower than yours, it could hurt.
Explore Non-QM Loans
Non-qualified mortgages serve borrowers who don’t fit standard guidelines. They have:
- Higher rates (1-2% above conventional)
- Larger down payment requirements
- More flexible credit evaluation
Wait and Build
Sometimes the best move is patience. Six months of credit work can:
- Add 50-100 points to your score
- Save you thousands in interest
- Expand your loan options
Frequently Asked Questions
What credit score do you need to buy a house?
Minimum 620 for conventional, 580 for FHA (3.5% down), or 500 for FHA (10% down). VA has no official minimum but lenders typically require 620+. For the best rates, aim for 740+.
Is 700 a good credit score for a mortgage?
Yes, 700 is good. You’ll qualify for most loan programs and get reasonable rates. However, improving to 740+ would save you money through lower rates and PMI.
Can I buy a house with a 600 credit score?
Yes, through FHA. At 600, you qualify for FHA with 3.5% down. Your rate will be higher than someone with 700+, but homeownership is accessible. Some conventional lenders may also work with you.
How long does it take to improve credit score 100 points?
Depends on what’s hurting your score. Paying down credit cards can add 40-60 points within a month or two. Fixing errors can add points immediately. Recovering from major negatives (bankruptcy, foreclosure) takes 2-4 years.
Does pre-approval hurt my credit score?
Yes, slightly. The hard inquiry typically drops your score 5-10 points temporarily. However, multiple mortgage inquiries within 14-45 days count as one inquiry, so shop multiple lenders without additional score impact.
What’s more important: credit score or income?
Both matter, differently. Credit score determines your interest rate. Income determines how much you can borrow. You need sufficient income to qualify AND a minimum credit score for the loan program. Improving either helps your situation.
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Michael Chen
Certified Financial Planner, Mortgage Specialist
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