With nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Dori Zinn Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Written By Dori Zinn Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Dori Zinn Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting.
Loans Writer Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
Chris Jennings Loans & Mortgages EditorChris Jennings is a writer and editor with more than seven years of experience in the personal finance and mortgage space. He enjoys simplifying complex mortgage topics for first-time homebuyers and homeowners alike. His work has been featured in a n.
| Loans & Mortgages Editor
Updated: Sep 25, 2023, 6:32pm
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Your credit score is one of the most important factors when it comes to qualifying for a mortgage—and getting a good interest rate. But the credit score needed to buy a house depends on your lender, where you want to live, and how much you need to borrow.
Experian can help raise your FICO® Score based on bill payment like your phone, utilities and popular streaming services. Results may vary. See site for more details.
Your mortgage lender will first look at the type of loan you are applying for to determine the minimum credit score to qualify as well as your down payment amount.
Since not all loans require the same credit score, here are a few different types of home loans and the credit score requirements for each.
The higher your credit score, the more likely you are to both qualify for a mortgage and for one at a lower interest rate.
The higher your down payment, the more likely you are to qualify for a loan with a low interest rate, too. If you put at least 20% down and want a conventional home loan, you can avoid private mortgage insurance (PMI)—an added monthly expense to protect lenders in case you default on your loan.
But you’re not required to put that much money down. And sometimes, you can even get a mortgage requiring no money down at all. Just keep in mind that no down payment can have some downsides as well.
With no money down, you’ll have higher monthly payments, potentially a higher interest rate and less chance of approval compared to someone who provides more cash up front. VA loans and USDA loans both offer financing for low- or no-down payment loans. Some private lenders offer this too—but it will vary depending on the lender.
While a good—or even an excellent—credit score improves your chances of getting a home loan, it’s still possible to qualify for a mortgage with a bad credit score. Here are a few tips to help you qualify if your credit isn’t the best:
Your credit score is one part of getting a mortgage, but it’s not the only part. Your lender considers many facets of your finances, including:
You could try getting a home loan with a bad score now, but you risk not qualifying for a mortgage or paying more to get the home of your dreams. You could wait a few months and improve your score instead. Here’s how:
You can usually check your credit score on any credit card issuer’s app or website, through your bank or other institutions where you borrow money. You can check your scores for free once a year on AnnualCreditReport.com.
You can reach out to any of the three major credit bureaus to dispute an error on your credit report, but you’ll need to have proof that the information on file is incorrect or doesn’t belong to you.
The credit agency can take about 30 days to investigate. They will reach out to you, as well as the company in question, for evidence as needed. If the company or lender can’t prove the information is accurate, they must notify the three major credit bureaus so the error can be removed from your report. You’ll get your results in writing, no matter the outcome. Hopefully, this will help your credit overall—and you’ll be ready to embark on your home buying journey.
In addition to determining which mortgage program you’re eligible for, lenders use credit scores to assess a borrower’s risk of default. Higher scores suggest a smaller risk of missed payments and foreclosure so it’s easier to qualify for a lower interest rate.
Homebuyers with good or excellent credit scores—from 670 to 850—typically have the best mortgage rates.
Here’s an example of the potential interest rate gap for a 30-year fixed-rate mortgage based on different credit score ranges. Additional calculations estimate the monthly payment and lifetime interest for a starting loan balance of $320,000.
Excellent credit (740 to 850) Good credit (670 to 739) Fair credit (580 to 669) See More See LessIn most cases, a FICO Score and a credit score are similar, but there are several differences when you scratch the surface and try to estimate your mortgage rate.
The overwhelming majority of lenders use the FICO credit scoring system developed by Fair Isaac Corporation. Its scoring range is from 300 to 850 and is based upon five credit factors.
Most credit score services retrieve the FICO Score 8, which is a basic appraisal of your credit history. It doesn’t emphasize a particular loan type and serves as a baseline for general lending decisions. Banks may also use a customized, industry-specific credit score when applying for certain consumer loans.
A leading competitor to the FICO Score is the VantageScore, which has many similarities to the FICO Score but isn’t as widely recognized in lending decisions.
Instead, the VantageScore 3.0 model is most often used by credit monitoring services. The scoring range is from 300 to 850 and is based on six credit factors instead of five like your FICO Score.
Many individuals may not realize that different FICO Score models exist. For example, lenders typically use a specialized score for specific purchase loans.
For example, there are mortgage-specific credit scores when evaluating home loan applications and an industry-specific automatic loan scoring version. These scores emphasize your previous experience with similar loans to evaluate how well you manage credit.
Each consumer credit bureau uses a unique mortgage-related credit score:
The bureau may weigh each scoring factor differently, and mortgage lenders typically pull from all three to comprehensively analyze your credit history. The lender uses your middle score of the three for underwriting purposes.
Check your rates today with Better Mortgage.
There are several places to check your credit score for free or a small premium. It will be your FICO Score or VantageScore, depending on the service. Many credit card companies allow you to check your credit score for free. Credit monitoring services are also an excellent option for ongoing updates. You can go directly to each credit bureau (Equifax, Experian and TransUnion) or myFICO as well, although service fees may apply.
Many consider an excellent credit score to range between 740 and 850. A score above 800 is exceptional and more challenging to achieve. To put this credit score range into perspective, Experian data reports that the average credit score in the United States was 719 in 2022. This national average is considered good credit, which typically ranges from 670 to 739.
A 650 credit score makes you eligible for most types of home loans, including conventional, FHA, VA and USDA loans. Still, this score falls within the top of the fair credit score range, which means you’ll likely qualify for higher interest rates, resulting in a pricier monthly payment. Your loan limit depends on several factors besides your credit score such as your debt-to-income ratio, down payment amount and loan term.
Two major government-backed programs offer zero-down payment mortgages, although the individual lender will have certain credit score requirements that you’ll need to meet. VA loan lenders typically require a minimum score anywhere between 580 and 620. USDA loan lenders usually ask for a credit score of 640 or above. Mortgage issuers may also offer conventional programs with no down payment requirements, although the minimum credit score can vary or may not be disclosed. Other eligibility factors also apply. If you need to put money down to qualify for a mortgage, look into down payment assistance programs.
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Loans WriterWith nearly two decades in journalism, Dori Zinn has covered loans and other personal finance topics for the better part of her career. She loves helping people learn about money, whether that’s preparing for retirement, saving for college, crafting a budget or starting to invest. Her work has been featured in the New York Times, Wall Street Journal, CNN, Yahoo, TIME, AP, CNET, New York Post and more.
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