What credit score do you need to secure a mortgage? (2024)

FAQs

What credit score do you need to secure a mortgage? ›

Mortgage lenders typically want to see a score of 620 or better before approving a conventional mortgage.

The minimum credit score needed for most mortgages is typically around 620.

FHA mortgage: To assume an FHA mortgage, buyers must have a FICO® Score of 580 or higher. USDA mortgage: A buyer needs a FICO® Score of 640 or higher to assume a USDA mortgage loan.

670–740: Good credit – Borrowers are typically approved and offered good interest rates. 620–670: Acceptable credit – Borrowers are typically approved at higher interest rates.

Your credit score has less bearing on your ability to get a mortgage than you might think. The minimum FICO score for a conventional loan is 620. The best rate comes with a score of 740 or higher.

For example, based on Fannie Mae's latest lending standards, you can get a mortgage with a debt-to-income ratio (DTI) as high as 45% with a standard 20% down payment if you have a credit score above 720. If you don't, your DTI is capped at 36%.

Your credit score typically won't affect the home loan amount you're able to receive. Instead, it will affect the interest rate of the loan. The lender will determine how much you can borrow based on a number of factors like your income, debt-to-income ratio, and more.

Mortgage lenders often get a single "tri-merge" report that contains your credit reports from each of the three credit bureaus and the associated FICO^® Scores. They might use the middle credit score or, if you're applying jointly with a partner, the lower middle score of the two.

You'll need a minimum qualifying credit score of 620 or better. Your qualifying FICO® Score is generally the middle one among your Equifax®, Experian™ and TransUnion® scores. Like your down payment, your credit score is one of the biggest factors impacting your interest rate.

FHA minimum credit score

If you put just 3.5 percent down, the minimum credit score for an FHA loan is 580. You can qualify with a score as low as 500, but you'll need to make at least a 10 percent down payment.

What is the average FICO score to buy a house? ›

What credit score do you need to get a mortgage? Mortgage lenders typically want to see a score of 620 or better before approving a conventional mortgage. There are government-insured mortgages if your score is lower, and if your score is 760 or higher you'll qualify for the best interest rates.

DOWN PAYMENT AND CLOSING COSTS

FHA loans require a down payment of 3.5%. For a $500,000 home, this amounts to $17,500. Closing costs should also be taken into consideration. These include various fees and taxes and generally fall between 2% and 2.25% of the listing price.

If you follow the 2.5 times your income rule, you divide the cost of the home by 2.5 to determine how much money you need to earn annually to afford it. Based on this rule, you would need to earn $100,000 per year to comfortably purchase a $250,000 home.

How much do I need to make to buy a $300K house? To purchase a $300K house, you may need to make between $50,000 and $74,500 a year. This is a rule of thumb, and the specific salary will vary depending on your credit score, debt-to-income ratio, type of home loan, loan term, and mortgage rate.

One rule of thumb is that the cost of your home should not exceed three times your income. On a salary of $70k, that would be $210,000. This is only one way to estimate your budget, however, and it assumes that you don't have a lot of other debts.

Yes, you can buy a house with a 600 credit score — but it would be less challenging if your score were higher. A 600 score will not be high enough to qualify for a conventional home loan, so look into FHA loans, which have lower requirements: 500 with a 10 percent down payment, and 580 with a 3.5 percent down payment.

Most lenders require a minimum credit score of 620 to buy a house with a conventional mortgage. Other types of mortgages have different credit score requirements: FHA home loans typically require a credit score of at least 500 if you put 10% down or 580 if you put 3.5% down.

Although ranges vary depending on the credit scoring model, generally credit scores from 580 to 669 are considered fair; 670 to 739 are considered good; 740 to 799 are considered very good; and 800 and up are considered excellent.

You can get a mortgage with a credit score as low as 620, 580 or even 500, depending on the type of loan. Some mortgage lenders offer bad credit loans with more flexible qualifying requirements but higher costs. Others offer free credit counseling to help you improve your score before applying for a loan.