There’s a lot that goes into a mortgage application — your available assets, employment status, monthly income, debt-to-income ratio, and even the sales price and value of the home you want to buy. But among the most significant factors a mortgage lender will look at are your credit scores.
Your credit scores help determine which loan programs you’re eligible for, as well as the interest rate you qualify for. Higher credit scores generally mean more financing options and better interest rates for you.
Minimum credit score requirements vary based on the type of loan program you apply for, so there’s no single answer to the question, “What credit score is needed for a mortgage?” That’s why we’ve broken down several common loan types, and the credit score requirements for each.
What's in this Article?
Before we dive into minimum credit score requirements, it’s important to be aware that lenders often add more conservative score requirements, known as “overlays,” on top of the minimum score requirements for different loan programs in order to reduce their risks.
There are many different lenders out there, so even if you are turned down by one, it’s worth applying with others.
Some lenders may even offer to help you improve your credit which in turn, can help you improve your FICO scores, so you can get the best possible interest rate and terms for your mortgage.
FICO is the type of credit score used by 90% of the U.S. lending community, including mortgage lenders. FICO scores are determined by your payment history, how much of your available credit you’re currently using, how long you’ve had credit accounts (including credit cards and loans), and how much new credit you’ve opened and applied for.
When you apply for a mortgage to buy a home, your lender will look at your FICO scores from the three major credit bureaus: Experian, Equifax, and TransUnion.
The information in your credit report contributes to your credit scores. Each of the credit bureaus maintain a credit profile on you that includes a detailed credit history, showing the types of accounts you have held or currently hold, and whether you paid them on time. Your credit report will show credit cards, student loans, car loans, personal loans, and past or current mortgages.
Your payment history is the biggest factor in your credit score. Other elements that influence it are your credit utilization ratio (how much of your available credit you’re currently using), and the age of your credit (how long your accounts have been open).
Below, you’ll see the minimum FICO credit score needed for popular mortgage loan programs.
Related reading: What Credit Scores Do Mortgage Lenders Use?
The minimum 620 FICO score requirement for a conforming conventional mortgage is set by Fannie Mae and Freddie Mac, the government-sponsored enterprises. These types of loans have maximum loan limits, which means there’s a cap on how much you can borrow.
If you are buying a high-value or luxury property, you may need a jumbo loan. Jumbo loans are a type of conventional loan, but they are not subject to the same loan limits. Lenders generally require higher FICO scores for jumbo loans, typically starting at 680. Jumbo loans also tend to have higher interest rates and tighter overall guideline requirements than conforming loans.
The Federal Housing Administration (FHA) eligibility guidelines indicate that 580 is the minimum FICO score you’ll need to qualify for an FHA loan with a minimum 3.5% down payment is 580.
FHA also allows homebuyers to qualify with FICO scores between 500-579 when they make a 10% down payment and meet all other lending criteria.
The FHA also gives lenders the ability to approve homebuyers who do not have traditional credit or FICO scores. Some lenders accept alternate forms of credit, such as a history of on-time payments for rent, utilities, cell phone bills, insurance payments, and streaming services.
Learn more: FHA Loan Credit Score: Do You Qualify?
The VA does not set minimum-required FICO scores but rather encourages lenders to help creditworthy, eligible veterans or servicemembers become homeowners.
The VA allows lenders to approve borrowers with no credit scores and alternative credit, whereas some lenders require 580 minimum FICO scores and others may look for minimum scores of 620.
Because of lender variables, an applicant who is declined with one lender shouldn’t assume they will be denied elsewhere.
Even if your credit score is non-existent or on the low end, it’s always worth talking with a lender. You may be surprised to learn that you can already qualify or that you can qualify in the future with certain credit improvement.
USDA loans are designed to help low- to moderate-income borrowers buy homes in rural and suburban areas. Backed by the U.S. Department of Agriculture (USDA), these 0% down home loans help make homeownership more accessible in designated USDA-eligible areas.
USDA guidelines recommend a minimum FICO score of 640. However, borrowers who have minimal debts, good credit, and steady employment, may be eligible for USDA loans even if their scores are lower than 640. But lender requirements may vary.
Minimum credit score needed by mortgage type
|Loan type||Minimum credit score requirement|
|VA||580 is common|
What credit score is needed for a mortgage? FAQs
Credit score requirements vary by the type of mortgage you want to use. The minimum credit score for a conventional loan is 620. For an FHA loan, it’s 580. Lenders often look for a credit score of 580 or higher for a VA loan, and the USDA’s suggested minimum is 640. However, the VA and USDA give lenders discretion to approve borrowers who are otherwise creditworthy but whose scores are lower than the standard requirements.
You can qualify for a mortgage with a 630 credit score. The minimum credit score for a conventional loan is 620; for FHA loans, it’s 580 and for VA loans, the minimum is typically set by the lender. However, the higher you can get your score before you apply for a mortgage loan, the greater your chances of approval and of getting competitive mortgage rates. In addition to meeting minimum credit score requirements, you’ll also need to meet other eligibility criteria, including sufficient income to make your monthly payments, proof of employment, and having a qualifying debt-to-income ratio.
A credit score of 670 is considered good, based on the FICO score model that is used by mortgage lenders. But the higher your score, the greater your chances of qualifying for a loan and receiving competitive interest rates.
If you have a lower credit score than you think you’ll need to qualify for a mortgage, talk to a lender anyway. They can tell you exactly what you need to do to raise your score. The process may take several months, or even years, depending on your finances and credit improvement plan. But getting insights from a professional will let you know you’re on the right track.
There are also steps you can take on your own. The first step is to find out what credit score is needed for the mortgage you want. Check out our guide on how to get a good credit score for some ideas where go next.
Some references sourced within this article have not been prepared by Fairway and are distributed for educational purposes only. The information is not guaranteed to be accurate and may not entirely represent the opinions of Fairway.
Fairway is not affiliated with any government agencies. These materials are not from VA, HUD or FHA, and were not approved by VA, HUD or FHA, or any other government agency .Fairway is not a registered or licensed credit management service provider.