The Credit Score You Need to Buy a House

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Jan 20, 2023

Tired of renting and ready to buy a new home? If so, you’ll definitely want to get your credit score up! The credit score you need for buying a house varies depending on the type of mortgage loan you get, but a higher score is always better.

In general, you’ll want to aim for 650 or higher, but there are a few exceptions, which we discuss below.

What Your Credit Score Do You Need to Buy a Home?

Your credit score gives lenders an idea of how you manage your finances. A high credit score indicates that you manage your loans and credit cards well. You use them often yet make your payments on time.

A higher credit score generally means a lower interest rate and smaller mortgage payments on your new home when compared to the same borrower with a lower credit score. Keep in mind that credit score is not the only factor when determining your interest rate and if you’ll qualify for a mortgage.

Applicants with a lower credit score can compensate somewhat with other indicators of good financial health. These elements include the following:

  • A long employment history with your current employer
  • High, stable income
  • A significant amount of savings

Conventional Mortgage Credit Score Requirements

Conventional home loans typically require a credit score of 620 or higher. These types of loans come from private lenders.

FHA Mortgage Credit Score Requirements

You can generally get an FHA loan with a credit score of 580 or above. In some cases, you may be able to get an FHA loan with a score as low as 500, but this scenario is much more difficult.

If you have a lower credit score, you’ll need to make a larger down payment for your new home. To get a loan with a score between 500 and 579, you must put down at least 10% of the home’s selling price. With a high credit score for buying a house, you can provide a smaller down payment. If your credit score is 580 or above, you can typically put down as little as 3.5% of the home’s price.

You can also opt for an FHA 203(k) loan. Ideal for fixer-uppers, this home renovation loan includes funds for both the home and the cost of renovating the property. This loan is available to applicants with a minimum credit score of 620.

Other Mortgage Loans

While an FHA loan is most readily available, it may not always be the best option. If you have a higher credit score, you should explore all your choices and find the loan that’s best suited to your individual needs. Consider the following options:

  • VA Loans: Available to veterans, VA loans have low interest rates and closing costs, and they allow you to finance 100% of your purchase. A credit score of 620 or higher is preferred, but some lenders will consider applicants with lower scores.
  • USDA Loans: USDA loans are available for homebuyers purchasing property in rural areas. Your household income must be no more than 115% of the median income in the area. You need a credit score of 640 or higher to qualify.

So What Actually Affects My Credit Score When It’s Time to Buy a House?

Your credit score is impacted by several factors:

  • Payment history: Lenders look for a long history of on-time payments for credit cards and other loans. Timely payments for rent and utilities don’t count toward your credit score, but if you miss these payments, the debt can go to a collection agency, which will have a negative impact on your score.
  • Credit usage: Lenders prefer credit usage of 30% or less. This figure is the percent of credit you’ve used compared to the total amount available on your cards.
  • Length of credit history: A long credit history gives you more credibility.
  • Credit mix: Your credit score increases moderately when you have a mix of loan types, such as credit cards, student loans, and auto loans.
  • Recent credit applications: Lenders prefer applicants who haven’t recently obtained or applied for new loans or credit cards.


If you’re interested in purchasing a new home, improving your credit score and getting a great deal on your loan are essential to the process. Keep your credit score high to get the best outcome possible on this major purchase.

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