What Is a Good Credit Score to Buy a House?: A Comprehensive Guide

woman managing her credit score by paying bills on time and monitoring credit utilization

A good credit score is the cornerstone of the home buying process. For everyone from first-time homebuyers to real estate investors, credit history plays a huge role. Determining the perfect score comes with many nuances. To understand them, you need to dive a little deeper into the subject. What is a good credit score to buy a house? Let’s find out.

How Your Credit Score Affects Your Mortgage Loan

A good credit score isn’t just the key to getting approved for a home mortgage. It can save you thousands of dollars over the loan term because it affects the interest rate.

FICO scores, the most commonly used type of credit score, usually range between 300 and 850. The majority of lenders views your credit score according to these credit score ranges:

  • Excellent: 750+
  • High: 700 – 749
  • Good: 650 – 699
  • Satisfactory: 580 – 649
  • Poor: below 580

A poor or bad credit score doesn’t mean you’ll be rejected. The lender may approve the loan but spike the interest rate. A low credit score increases the risk of defaults and late payments, so lenders try to protect themselves by boosting the payment size.

A high credit score (or, even better, an excellent credit score) shows your ability to pay on time, which lowers the level of risk taken by the lender. This means they’re more likely to give you favorable terms, both for the approved loan amount and the approved interest rate.

What is a good credit score to buy a house and have a lower interest rate?

Let’s start with an example. Assume the difference between the interest rate for a person with a 670 credit score and a person with a 750 credit score is about 0.6%. Look at what both people will be paying for a 30-year $200,000 loan (with a down payment of $20,000):

First person (750 credit score): At an interest rate of 3.2%, the monthly payment is $890.

Second person (670 credit score): At an interest rate of 3.8%, the monthly payment $943.

The difference in monthly payments is $53. Over the course of 30 years, the second person will pay $19,080 more than the first person. Having a higher credit score almost always leads to more favorable rates and terms.

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Minimum Credit Score for a Home Loan: Type of Loan

couple and a financial advisor discussing different mortgage types and their requisite credit scores

When you’re asking, “What is a good credit score to buy a house?” it depends on the type of mortgage you choose. Here are some of the most common loan types for new mortgages and the credit ratings they require:

1. Conventional Mortgages

A conventional mortgage is a loan, and it isn’t backed by a government agency. It is serviced by private mortgage lenders or financial institutions. These loans tend to have competitive interest rates and flexible repayment periods. However, they rarely have minimal credit score requirements and low down payments.

Pro Tip:

To qualify for a conventional loan, you need a credit score of at least 620.

2. FHA Loans

FHA loans are provided by the Federal Housing Administration. The biggest advantage of such a loan is the possibility of paying only 3.5% of the property price as a down payment.

Unlike conventional loan providers, FHA doesn’t demand higher interest rates from borrowers with lower credit scores. Also, the refinancing guidelines are usually lenient.

What is a good credit score to buy a house under the terms of an FHA loan?

If you apply for a loan with a 10% down payment, there is no minimum credit score. However, FHA loan originators may have a minimum score requirement. Usually, it’s around 500.

3. VA Loans

VA loans are available to a limited audience, and they are managed by the Department of Veterans Affairs. You generally have to be a member or a veteran of the U.S. Military, National Guard, or U.S. Military Reserves to qualify. These loans don’t have minimum credit score requirements and are available to people with poor credit histories.

What is a good credit score to buy a house if you qualify for a VA loan?

The higher, the better, but a low score won’t necessarily stand in your way. The minimum credit score for a VA home loan doesn’t exist. However, just as with FHA loans, the private lenders who originate these mortgages can set their own minimums. Generally, they are around 620.

Other Factors That Lenders Consider

Many people ask what credit score is needed to buy a house without realizing that it isn’t the only parameter lenders consider when approving a mortgage. Other factors include:


Lenders check your income to make sure you can afford the estimated mortgage payments.

Debt-to-Income Ratio

Lenders may look at other monthly debt payments, like student loans. If the amount you have to pay each month, including the upcoming mortgage payment, is more than about 43% of your monthly income, even a good credit score may not help.

Size of the Down Payment

Lenders may consider the initial amount you are willing to pay when deciding whether to accept you. They believe that you are less likely to stop paying if you make a significant initial investment in the property. A high down payment can also lower your interest rate.


Lenders may want to check how much money you have available to pay off the debt in case you lose your job. If you have enough to make at least two monthly payments, you have a higher chance of acceptance.

Work History

Some lenders may want to check your employment history to see how often you switch jobs. This can help them assess risks associated with lending.

Home Value

Lenders want to make sure that the house you are buying is in good condition so that it’s worth the investment.

Getting Approved for a Mortgage Loan With a Low Credit Score

If you have a less-than-satisfactory credit score, you can improve your chances of approval by:

  • Applying for an FHA loan
  • Saving up enough money for a formidable down payment
  • Keeping a large amount in your savings account
  • Asking someone with a high credit score to apply as a cosigner
    Reducing current debt to improve the debt-to-income ratio
  • Shopping around for different lenders

If you want to take some time to repair your credit score, that’s also a great personal finance strategy. You can consider renting while beefing up your credit score by:

  • Paying all your bills on time to build a consistent payment history
  • Keeping credit card balances low
  • Checking credit reports to track the progress and discover errors
  • Closing any unused credit cards
  • Registering to vote (in some instances, this can improve your credit score)
  • Breaking the financial connection with an ex-partner with a low credit score (e.g., closing your joint accounts)

When asking, “What is a good credit score to buy a house?” you need to remember that it depends on many factors, including your efforts to improve your score.

Pro Tip:

If you purchased a house previously with a low credit rating and a high mortgage rate, you can refinance your mortgage once you have excellent credit to access lower interest rates.

What Is a Good Credit Score to Buy a House? Frequently Asked Questions

Q: Is it possible to buy a house with a bad credit score?

A: Yes. Certain types of home buying loans don’t require good credit. Additionally, you can prove your reliability to the lender by making a large down payment, showing a good debt-to-income ratio, keeping a hefty amount in your savings account, and demonstrating that your score is increasing.

Q: Can you get a mortgage without credit history?

A: Yes. If you are a first-time homebuyer without a credit history, you may be approved for an FHA or VA loan. Many financial institutions will also consider you for a conventional mortgage loan. However, it’s a good strategy to start developing your new credit history so lenders can better evaluate your creditworthiness.

Q: Which credit score is used to buy a house?

A: There are a couple different credit score models: a FICO score and a VantageScore. The major credit bureaus Equifax, Experian, and TransUnion each use these credit scores to determine credit ratings. But to determine the risks of approving a mortgage, lenders work with your FICO score.

This number is calculated based on the information from your credit reports that evaluates your creditworthiness, including:

  • The duration of your credit history
  • The amount of credit
  • How much available credit you use as a proportion of your total available credit (which is called your credit utilization ratio)
  • How timely your payments are

Q: Is a good credit score enough to get a loan?

A: Generally, a good credit score plays a big role in a mortgage approval. However, lenders also look at other factors, including down payment size, the amount of savings you have, employment history, house value, income, and debt-to-income ratio.

Q: What is a minimum credit score for first-time homebuyers?

A: There is no minimum FICO score for first-time homebuyers if they apply for FHA or VA loans. However, the chances of approval are low if your score is below 580.

Q: What is a good credit score to buy a house at the best interest rate?

A: It depends on the lender. But generally, access to the top mortgage rates has a credit score requirement of 750 or higher by the time you submit your mortgage application. If you’re purchasing a high-value property and need a jumbo loan, the minimum required credit score is 680.

What Is a Good Credit Score to Buy a House? The Takeaway

Your chances at mortgage approval depend on many factors, the key parameter being your credit score. A good credit score to buy a house varies from 650 to 750 and beyond. Even if you have bad credit or a short credit history, it’s possible to be approved for a mortgage. However, you are likely to face a high-interest rate and a sizable down payment. It may make sense to beef up your score first instead of settling for high monthly payments. Low monthly payments can help you pay the mortgage off faster.