What Credit Score is Needed to Buy a House
One of the first steps you’ll go through in preparing to buy a house will be getting your credit in order. So, what should your credit score be if you’re wanting to buy a house? Well, there’s no definitive answer. Obviously the higher your credit score the better off you’ll be in terms of down payment and mortgage agreements, but a variety of factors beyond just your credit score will determine how your home buying agreements take shape.
What’s the Minimum Credit Score Needed to Buy a House
Narrowing in on a range of credit scores which could qualify you for a loan is tricky. Even though there are FHA guidelines and regulations, many FHA lenders actually have a stricter and less generous leeway when it comes to the minimum credit score they’ll allow qualify for a home loan.
The lowest credit score you can get an FHA loan with is currently 500, and a minimum of 580 is needed to make the minimum down payment (3.5%). However, if you happen to be below this you aren’t necessarily excluded from FHA loan eligibility. Conversely, most lenders will say that if your credit is below the 620 range, you’re likely not eligible, despite this being above the credit score required by the FHA. Many say a 720 score or higher is ideal, but even that still won’t guarantee your loan will be approved.
Here are credit score minimums as stated by the FHA
- Credit score at or above 580. Eligible for 3.5% down payment.
- Credit score of 500-579. Must put 10% down, but still eligible.
- Credit score below 500. Not eligible for FHA financing.
However, as previously stated, most lenders require a score of at least 620-640.
Other Factors that May Positively Impact a Loan Decision
- Excellent credit history
- Minimal consumer debt
- Long-term employment
- Conservative use of consumer credit
- Sizable down payment
It's best to start by checking with your bank to see where your credit score currently ranks. Then you can move forward with assessing what types of mortgages are available for you.
