What Is a Good Credit Score for Buying a House?

Most mortgage lenders start looking for a credit score of at least 620 when you apply for a conventional loan, because that's the baseline set by Fannie Mae and Freddie Mac for "prime-plus" borrowers; scores below 620 can still qualify, but you'll likely need a government-backed program (such as FHA, VA, or USDA) or a larger down payment to offset the perceived risk. For FHA loans, the official minimum is 580 if you can put down 3.5 % of the purchase price, while a score between 500 and 579 requires a 10 % down payment. VA loans don't impose a strict floor, but most lenders prefer a score of 620 or higher to keep the interest rate competitive. USDA loans generally look for 640 or above, though exceptions exist for strong compensating factors like a solid employment history.

Keep in mind that even if you meet the minimum, lenders will still assess your overall credit profile-payment history, debt-to-income ratio, and recent inquiries-so a higher score (typically 700 plus) improves both your odds of approval and the likelihood of securing a lower interest rate.

FHA loans are the most forgiving when it comes to credit scores. Most mortgage lenders will consider a borrower with a score of 620 or higher for FHA financing, and some will even approve applicants down to 580 if the down payment is at least 10 percent. The program's built-in insurance cushions lenders against higher risk, so the credit-score floor is deliberately low to help first-time buyers and those rebuilding credit.

VA loans typically require a slightly higher score, though the Department of Veterans Affairs itself does not set a hard minimum. In practice, most lenders look for a credit score of 640 or more; veterans with scores in the high-500s may still qualify if they can demonstrate strong payment history and a low debt-to-income ratio. Conventional mortgages, by contrast, start at the higher end of the spectrum: most lenders set the baseline at 680 for a "prime" loan, with scores of 720 or above unlocking the most competitive rates. Borrowers with scores between 620 and 679 can still obtain a conventional loan, but they usually face higher interest rates and may need a larger down payment to offset the perceived risk.

Lenders diginto the whole financial picture, not just the three-digit number on your credit report. They start with your debt-to-income (DTI) ratio, which measures how much of your monthly earnings are already committed to existing debts. A lower DTI signals that you have enough cash flow to handle a new mortgage payment, even if your credit score sits near the minimum threshold. Next, they examine your employment history and income stability; a steady job or consistent self-employment earnings reassures the loan officer that you can meet payment obligations over the long term.

Beyond those basics, lenders also weigh several "compensating factors" that can offset a modest credit score:

• Down payment size - putting down 20 % or more often reduces perceived risk and can earn you better terms.
• Cash reserves - showing several months of savings after closing demonstrates flexibility in case of unexpected expenses.
• Payment history on other accounts - on-time rent, utility, or student-loan payments can be factored in, especially for newer borrowers.
• Asset portfolio - investments, retirement accounts, or other real-estate holdings provide additional security to the lender.
• Recent credit activity - a recent payoff of a large debt or a limited number of recent inquiries can signal responsible credit management.

By reviewing these elements together, mortgage lenders build a more nuanced risk profile than a credit score alone can convey.

A credit score of 620 sits just above the typical floor for many conventional loan programs, so lenders often view it as "borderline but workable." At this level, a mortgage lender will dig deeper into the rest of your file-steady employment, a low debt-to-income ratio, and a solid down payment can offset the modest score. Programs such as FHA, VA, and some non-QM products are designed to accommodate borrowers in the 620-plus range, meaning the lender can still issue a preapproval as long as the overall risk profile looks stable.

Because the score is close to the minimum, the loan officer may require additional documentation-like recent pay stubs, bank statements showing reserves, or a larger cash-out down payment-to demonstrate repayment capability. These compensating factors help the lender feel comfortable extending credit, even if the interest rate offered is slightly higher than what a borrower with a 720 score would receive. In short, a 620 score doesn't automatically shut the door; it just means the lender will look at the whole picture before giving final approval.

Your credit score is the single most influential factor in determining the interest rate a mortgage lender will quote you. A higher score signals lower risk, which lenders reward with cheaper financing; a lower score does the opposite, nudging the rate upward and increasing the overall cost of homeownership.

1. Identify the baseline tier - Lenders typically group scores into buckets (e.g., 720-800, 680-719, 640-679, 620-639). Each bucket carries a predefined "spread" above the lender's base rate, so moving from one bucket to the next can add 0.25%-0.75% to your APR.
2. Calculate the rate impact - For a 30-year fixed loan, a 0.5% increase translates to roughly $75 more per month on a $250,000 mortgage, or about $900 annually. Over a 30-year term, that extra cost compounds to over $27,000.
3. Consider compensating factors - A larger down payment, a low debt-to-income ratio, or strong cash reserves can offset a modestly lower score, allowing the lender to offer a rate closer to the higher-score bucket.
4. Shop multiple lenders - Even within the same score tier, lenders' pricing models differ. Request quotes from at least three mortgage lenders; a 0.125% difference can still save you several thousand dollars.
5. Lock in when appropriate - Once you've secured a rate that reflects your score and compensating factors, discuss rate-lock options with the loan officer to protect against market fluctuations before closing.

If your credit score lands in the borderline zone-typically just a few points above a lender's minimum-it won't automatically shut the door, but it does change the conversation with the mortgage lender. In this range, lenders start looking more closely at the rest of your financial picture, and small adjustments can tip the scales between a smooth preapproval and a request for additional documentation or a higher interest rate.

• Compensating factors: A larger down payment, low debt-to-income ratio, or several years of on-time payment history can offset a score that's just shy of the ideal range.
• Program flexibility: Some government-backed loans (e.g., FHA) and certain "non-QM" products are designed to accommodate borderline scores, often with slightly higher rates but more lenient qualification criteria.
• Rate impact: Even if you qualify, expect the lender to price the loan a few tenths of a percent higher than they would for a borrower with a stronger score, which can add several hundred dollars to the monthly payment.
• Documentation demand: Lenders may ask for additional proof of income stability, recent bank statements, or explanations for any recent credit inquiries or minor derogatory marks.

In practice, a borderline score gives you an opportunity to strengthen your application before you lock in a mortgage. By boosting your down payment, paying down existing debts, or waiting until a few positive credit actions register, you can often move from "borderline" to "qualifying" and secure a more favorable rate.

Pay down revolving balances - aim to keep credit utilization under 30% (ideally below 10%). Lowering the amount you owe on credit cards frees up available credit, which most lenders view as a sign of responsible borrowing.

Correct any errors on your credit reports - request a free copy from the three major bureaus, scan for inaccurate late payments, duplicate accounts, or outdated collections, and dispute mistakes. A clean report can instantly boost your score.

Avoid opening new credit lines - each hard inquiry can shave a few points, and new accounts reduce the average age of your credit history. Hold off on applying for cards or loans until after you've secured your mortgage pre-approval.

Keep older accounts open and active - the length of your credit history contributes up to 15% of your score. Even if you don't use a long-standing card, maintaining a small recurring charge and paying it off each month preserves its positive impact.

Establish a solid payment history - set up automatic payments or calendar reminders to ensure every bill-credit cards, utilities, student loans-is paid on time. Consistently on-time payments are the single biggest factor in raising your credit score.

A co-borrower-typically a spouse, partner, parent, or other trusted family member-adds their credit history, income, and debt profile to the loan file, giving the mortgage lender a fuller picture of repayment capacity. When one applicant's credit score falls short of the lender's baseline (often around 620 for conventional loans), a co-borrower with a stronger score can pull the combined application into the acceptable range, improving the odds of approval and sometimes unlocking better rates.

For example, imagine a single buyer with a 580 credit score who earns $55,000 a year and carries $20,000 in student loans. Adding a spouse who has a 720 score, earns $80,000, and has minimal debt can raise the household's average credit profile enough for the lender to deem the risk manageable. In another scenario, a first-time homebuyer with a 610 score partners with a parent who has a 750 score and a solid employment record; the parent's income and high credit score can compensate for the buyer's weaker number, allowing the loan officer to issue pre-approval that might otherwise be denied. These situations illustrate how a co-borrower can bridge gaps in credit quality, provide additional debt-to-income relief, and ultimately help both parties secure a mortgage they might not qualify for on their own.

A surprisingly common slip-up is letting late-payment marks linger on your credit report. Even a single 30-day delinquency can shave dozens of points off your credit score, and lenders view it as a red flag for future mortgage behavior. The damage compounds when missed payments pile up across multiple accounts-credit cards, auto loans, or student debt-because the loan officer will see a pattern rather than an isolated mistake. To keep your score in the "good" range for a home purchase, aim to settle any outstanding balances within 30 days and set up automatic reminders or autopay to avoid future lapses.

Another frequent error is maxing out revolving credit just before applying for a mortgage. High credit utilization-the ratio of balances to limits-signals financial strain and can drop your score dramatically, sometimes pushing you below the 620-point threshold that many conventional lenders consider the floor for approval. Likewise, opening several new credit lines in a short span generates multiple hard inquiries, which the mortgage lender interprets as a sign you're taking on more debt than you can handle. Before you seek preapproval, keep utilization under 30 % and resist the urge to chase new cards or loans; a tidy, well-managed credit profile is far more persuasive than a higher raw score riddled with recent activity.