Mortgage lenders consider your credit score a measure of your ability to manage debt responsibly. The higher your credit score, the better your chances of being approved for a home loan.
Having good credit can also make it possible to qualify for a with more competitive terms, like a lower interest rate. On the other hand, your home loan options may be limited if you have bad credit, but there are certain programs available to aspiring homebuyers across the credit spectrum.
What Homebuyers Need To Know About Mortgage Eligibility and Credit Scores
The minimum credit score you need to buy a home depends on you plan to borrow. A conforming mortgage usually requires a credit score of at least 620, but it may be possible to qualify for a government-backed loan with a score as low as 500.
However, just because you’ve reached the minimum credit score to borrow a mortgage doesn’t necessarily mean you’ll meet all the other eligibility requirements. The average credit score among mortgage borrowers is 741, according to the most recent data from the .
Generally, having a higher credit score will help you qualify for a home loan with a lower , so it’s important to work on improving your credit score well in advance of buying a home.
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From 500 to 620-plus: The Baseline Scores for Every Major Loan Type
Mortgage credit score requirements vary based on several factors, including the loan type, amount and lender.
, which are not backed by a government agency, require a minimum credit score of 620 to be purchased by Fannie Mae and Freddie Mac. Jumbo loans that exceed the have stricter eligibility requirements for credit score, down payment and income.
Meanwhile, government-backed mortgages are insured by a federal agency, such as the Federal Housing Administration, the Department of Agriculture or the . This government guarantee protects the lender if you default on your mortgage, which translates to less stringent credit score requirements.
You can see the minimum credit score criteria by mortgage type in the table below.
| Minimum Credit Score | Who Can Benefit | |
| Conforming loan | 620 or higher to be eligible for sale to ; lenders may have stricter requirements | Well-qualified buyers seeking a traditional mortgage |
| FHA loan | 580 or higher with a 3.5% down payment; as low as 500 with a 10% down payment | Homebuyers with fair credit and small down payments |
| USDA loan | No set minimum; borrowers with a score of 640 or higher may qualify for a streamlined credit analysis | Qualified buyers purchasing homes in designated rural areas |
| VA loan | No set minimum; lenders commonly require a score of at least 620 | Active-duty and retired military personnel who are buying or refinancing a home |
| Jumbo loan | Typically, , depending on the lender; higher loan amounts may require stronger credit scores and larger down payments | Buyers borrowing a mortgage that exceeds the conforming loan limit |
The Multi-Model Shift: Which Credit Metrics Mortgage Lenders Are Pulling
For decades, mortgage lenders relied on FICO 2, 4, or 5 when underwriting conforming loans. However, the Federal Housing Finance Agency and the Department of Housing and Urban Development have recently updated their guidelines to allow new credit-scoring models: VantageScore 4.0 and FICO Score 10T. Fannie Mae, Freddie Mac, and the Federal Housing Administration are actively rolling out these systems. While approved lenders can already use VantageScore 4.0, the full implementation of FICO 10T is set to follow.
The latest scoring models give lenders a clearer long-term picture of creditworthiness. For example, FICO 10T uses trended data over a longer period rather than just a snapshot at a single point in time. VantageScore 4.0 uses machine learning to consider a wider range of nontraditional financial data, allowing the agency to score 33 million more U.S. Americans than previously possible
Why Credit Score Matters When Buying a Home
In general, having a higher credit score makes it possible to qualify for better loan repayment terms, such as a lower mortgage rate. This is true regardless of which type of mortgage you decide to borrow.
For conventional loans purchased by Fannie Mae and Freddie Mac, your credit score directly correlates to the mortgage rate you pay through . Borrowers with a FICO credit score above 780 and a down payment of at least 40% will see the lowest possible financing charges, while those with a score below 640 could see the highest rates available.
Even a small difference in your mortgage rate can translate to thousands of dollars in savings over the life of the loan. On a $250,000 30-year loan with a 6% mortgage rate, you can expect to pay $289,595 in interest charges over the duration of the loan. With a rate increase of just a 0.25 percentage point, you’d pay an extra $14,550 in interest by the time the loan is fully repaid.
A lower mortgage interest rate can also help you save money in your monthly budget. The monthly principal and interest payment on the same loan at 6% would be $1,499, compared with $1,539 at a 6.25% rate.
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The 43% DTI Cliff and Other Blindspots That Stall Approvals
Your credit score is just one measure of your financial health, and it’s not the only factor mortgage lenders will consider when determining your eligibility for a home loan. Here are some additional criteria that affect your chances of mortgage approval:
— Debt-to-income ratio, which is your total monthly bills divided by your gross monthly income. Having a DTI ratio of 43% or higher may make it more difficult to .
— Loan-to-value ratio, which is the loan amount divided by the house purchase price. If you have a , your LTV ratio will be lower, and vice versa.
— Negative credit history, such as defaulted loans, foreclosure or bankruptcy. For example, you need to wait one to two years after bankruptcy to , depending on the chapter.
— Liquid assets, such as savings and investment accounts. This is particularly important for who are buying multi-million-dollar homes.
— Profits and losses, if you own a business. This can help measure your likelihood of repaying a mortgage as a self-employed individual.
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How to Prepare Your Credit Score for Buying a Home
If your credit score is holding you back from buying a home, you should start building better credit now. If you have bad credit, it could take months or a year to get your credit in shape to qualify for a mortgage. Here are a few steps to help improve your credit score before applying for a home loan.
1. Check Your Credit Score and Report
Before you can come up with a plan to boost your credit score, you’ll need to find out where you currently stand. Many banks and third-party financial apps let you for free without damaging your credit.
You should also get a from all three credit bureaus — Equifax, Experian and TransUnion — on AnnualCreditReport.com. Your credit report provides an in-depth look into your financial history, including your outstanding debts, total accounts and on-time payment record. If you find errors on your credit report, dispute them with the bureau directly.
2. Find Areas for Improving Your Credit Score
With your credit report and scores in hand, look for areas where you can make improvements before you apply for a mortgage. Here are a few common credit issues and how to resolve them:
Poor on-time payment history: Enroll in automatic payments for credit cards, auto loans and other bills. Additionally, make sure any bills you pay each month (such as or buy now, pay later installments) are reported to the credit bureaus.
High credit utilization: Pay down your credit card balances. You can also , but make sure not to rack up more debt just because your limit is higher.
Low age of credit: Keep older, well-established accounts open. If you have a credit card account , consider charging it once every few months and paying off the balance to keep it active.
3. Avoid Applying for New Credit While You Shop for a Home
Opening a new account, such as a credit card or auto loan, lowers your average age of credit and results in a hard credit inquiry that can lower your score by a few points. Importantly, after you’ve already been preapproved for a mortgage can pose big issues during the underwriting process.
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Update 06/08/26: This story was previously published at an earlier date and has been updated with new information.
