Credit Score to Buy a House: What You Need to Know

Learn More About Credit Scores for Homebuyers

Having the right credit score can make getting approved for a mortgage to buy a home easier. Learn how credit scores affect your homebuying plans and see what credit score you'll need to qualify for a mortgage loan from Freedom Mortgage.

Why Are Credit Scores Important in Homebuying?

Your credit score is an important piece of information lenders use to help decide if they'll be able to approve your mortgage application for buying a house. It can also influence the favorability of your loan terms and your cost to borrow money. Lenders follow mortgage guidelines, which tend to have a minimum credit score requirement to approve your home loan application. If your score is too low, your application could be denied.

How Credit Scores Affect Mortgage Approvals

When you're buying a home, a good credit score not only improves your chances of getting approved for a mortgage, it can also help you qualify for a lower minimum down payment and often a lower interest rate. That's because historically, homebuyers with good credit scores are most likely to meet their financial obligations.

That said, even if you're still working on building or repairing your credit, you can still pursue your homeownership dreams. You can compare minimum credit requirements across lenders, explore loan products with lower credit score requirements, or focus on improving your credit before applying.

What Credit Score Is Needed To Buy a House?

In general, the majority of mortgages require a credit score of 620 or higher. However, credit score requirements to buy a home can vary based on the lender and mortgage type.

• Conventional loans require a score of 620 or higher
• FHA loans can have credit score requirements as low as 500 (with a 10% down payment). Freedom Mortgage requires a 550 minimum credit score
• VA loans tend to have a minimum credit score of around 580-620 (Freedom Mortgage requires only a 550 minimum credit score)
• USDA loans typically require a credit score of 620, but lenders may accept lower with manual underwriting

The reason for varying credit score requirements is based on the risk of the loan defaulting. FHA loan credit requirements tend to be more flexible because they're insured by the Federal Housing Administration (FHA), which reduces loss in case of a default. Conversely, conventional jumbo loans involve larger loan amounts and aren't backed by the government, so stronger credit is required for approval.

You can get your credit score online through the three major credit bureaus (Equifax®, Experian®, and TransUnion®). And to better understand if you have the credit score it takes to qualify for a home loan now, consider getting prequalified. It's free and usually doesn't affect your credit score.

Credit Score to Buy a House: FAQs

Have more questions about how credit scores relate to buying a home? We've got you covered!

How Do You Check Your Credit Score Before You Buy a Home?

You can always find your credit score through the major credit bureaus (Equifax, Experian, and TransUnion).

By law, credit reporting agencies are required to provide you with a free copy of your credit report once every 12 months, but these free reports do not include credit scores.

When Freedom Mortgage prequalifies you for a mortgage to purchase a house, we will conduct a “soft” credit check, which generally doesn't affect your credit score. When you give us permission to pull your credit for prequalification, we can often tell you your current credit scores.

Prequalification can also give you an estimate of home prices you can afford. This includes an estimate of how much money you might get a mortgage approval for.

What Is a Good Credit Score to Buy a House?

According to the Consumer Financial Protection Bureau (CFPB) , mortgage applicants with credit scores in the mid- to high-700s and above often receive the best interest rates from lenders.

How Can You Improve Your Credit Score to Buy a Home?

Individuals can increase their credit score by:

• Reducing debt
• Keeping debt-to-income ratios low
• Making payments on time
• Disputing potential errors in their reports
• Limiting credit applications or hard checks when possible
• Refinancing or consolidating debt for lower interest rates and faster loan repayment

Can You Get a Mortgage with a Bad Credit Score?

While borrowers with lower credit scores might be offered higher interest rates, there are still affordable options available for home financing through Freedom Mortgage. For example, you might qualify for an FHA loan.

Buy a Home with Freedom Mortgage Today

Knowing your credit score can help you determine when to apply for a mortgage. It can also help you establish expectations for your approval odds, as well as loan terms and costs. If you're wondering how low of a mortgage rate your credit score could help you qualify for today, get prequalified now and start the next steps toward buying an affordable home with Freedom Mortgage.