What credit score is needed to buy a house? The reality is that you can buy a house no matter your credit score. If it’s 580 you can buy a house, if it’s 850, you can buy a house. If you have no credit score, you can still buy a house. However, I understand why you’re wondering what credit score is acceptable. The world of personal finance has assigned a high worth to the almighty credit score. However, that’s okay. It’s the best thing we have for measuring a persons financial responsibility. It’s like a report card for one’s finances. So what credit score is needed to buy a house? Let’s analyze your options if you have no score and then work our way up.

Buying a House with No Credit Score

Some people either swear against using credit or they simply haven’t been around long enough to develop score. If you fall into either of these groups, you can still get a mortgage right now. But it takes work. Dave Ramsey, a huge proponent of mortgages without credit, even admits it’s difficult. Getting a mortgage without a credit score means lenders both want a) a large down payment and b) proof of financial responsibility in other areas (this is their attempt at mocking up a credit score for you).

Giving a large down payment shows you are responsible with money. Obviously you are because you’ve saved quite a lot. Put at least 20% down. When a bank sees this, they see less risk for giving you a mortgage.

You can prove you are responsible by showing a lender a list of the following bills which you have dutifully paid:

  • Rent
  • Utility bills
  • Other bills
  • Insurance premiums
  • Childcare, tuition payments, etc.

So buying a house with no credit score is possible, albeit it a pain.

Buying a House with a Poor Credit Score

Never think your score is too low to buy a home. It’s not. When getting a low-score mortgage, the path of least resistance is with an FHA loan. If your score is as low as 580, you only need 3.5% down. However, even with a score lower than 580, you can still get a loan through the FHA. However, you will have to put 10% down. Still… not too scary.

Buying a House with a Good Credit Score

If you have a good credit score, you won’t have a problem. Lenders will happily talk with you all day long. Heck, if you have a good score maybe that means you should consider paying with cash. However, hardly anyone does that – Google ‘opportunity cost’ if you don’t already know that it means.

What Is the Optimum Credit Score to Have When Buying a House?

The ideal credit score for buying a house is 740. This will ensure you get the lowest interest rate available. Any higher – who cares, any lower – you’ll end up paying a lot more. I just crossed the 740 mark (744) will my own credit score. However, I determined this using the credit score given on my Discover it card dashboard. See, when applying for a mortgage, lenders have many different models for determining your credit score. This means your favorite lender may not give you the best rate because their credit scoring model puts you below a 740:

  • Equifax Beacon 5.0
  • Experian/Fair Isaac Risk Model v2
  • TransUnion FICO Risk Score 04

You don’t want to lose a lender just because they use a scoring model that dips you below 740. So it’s wise to get your score as high as possible before shopping. This will ensure you can get the best rate, no matter the credit model.

What Credit Score Is Needed to Buy a House?

The answer: no credit score is needed. But if you want to make the process as easy as possible, ensure your credit score is above 740 no matter which credit scoring model is used.