To buy a house with a conventional mortgage, USDA loan, or VA loan, you’ll typically need a credit score of at least 620 to 640. Those with lower scores may be eligible for FHA loans, which have minimum scores of 500 or 580, depending on the down payment amount.
What Credit Score Do You Need to Buy a House?
The minimum credit score needed to buy a home varies depending on the type of loan. In general, you must have a credit score of at least:
- Conventional mortgage: 620
- Federal Housing Administration (FHA) loan: 500 or 580, depending on your down payment amount
- U.S. Department of Agriculture (USDA) loan: No nationwide minimum; usually 640
- U.S. Department of Veterans Affairs (VA) loan: No nationwide minimum; usually 620
Because FHA loans are government-insured, they’re typically easier to get than conventional mortgages. They’re designed for first-time home buyers and those with lower credit scores, low down payment savings, and moderate income.
Down payments for FHA loans start at 3.5%, while conventional loans typically require down payments between 5% and 20%. (USDA and VA loans don’t require down payments, but have additional eligibility requirements.)
If an FHA lender approves you with a credit score between 500 and 579, it will usually require an increased down payment of 10%.
However, only select FHA lenders offer this; we contacted several FHA lenders, including Quicken Loans, and found that most require a minimum score of 580.
The Ideal Score
To qualify for the best interest rates, you should have a credit score of 740 or above. All but one of the lenders we contacted said 740; the other said 760.
Keep in mind that because a score of 740 or above is generally considered “Excellent,” an 850 credit score (the best a person can get) will likely get you the same interest rate as someone with a 740.
To determine if you have the ideal credit score for buying a home, make sure the average of your three scores is at least 740.
You can use online tools like Credit Karma or CreditWise to monitor your score yourself; if it remains above 740 between all three of the major bureaus (Equifax, Experian, and TransUnion) for a few months, you should qualify for a low interest rate.
If you don’t have an excellent credit score, you may be able to get your interest rate decreased in other ways, such as by offering a larger down payment.
How Lenders Decide Your Score
There are several different credit scores your lender will likely use to assign you an interest rate.
Most lenders check FICO scores from the three major credit bureaus (Equifax, Experian, and TransUnion), which provide three different score versions:
- Equifax Beacon 5.0
- Experian/Fair Isaac Risk Model v2
- TransUnion FICO Risk Score 04
If all three scores are different, the lender will use the middle score rather than the highest or lowest score.
If two of the scores are the same, the lender will use that score, regardless of whether the two repeated scores are higher or lower than the third score.
Other Mortgage Approval Factors
Lenders will determine your eligibility for a mortgage based on the following criteria:
- Credit score
- Credit history/profile
- Debt-to-income ratio
- Down payment
- Employment history
Note that VA and USDA loans have additional requirements; VA loans are for members or veterans of the military, and USDA loans require that the home is located in an eligible rural area.
Because lenders consider all of these factors, a low credit score won’t necessarily disqualify you for a loan, particularly if you choose a lender that practices manual underwriting.
However, if approved, lower credit scores will receive higher interest rates, meaning the total cost of your home by the time you pay the mortgage off will be higher.