What Credit Score Do You Need to Buy a House?

The credit score is crucial in obtaining a mortgage loan, that is why most prospective home buyers fear that theirs may be too low to acquire one. It has not only an impact on your qualification but also the interest rate to be charged.

So, what is a good credit score to buy a house in 2022?

Whether or not a credit score is good is often subjective and may have minimal influence on buying a house. This is because mortgage lenders follow specific rules that decide what credit score you require to purchase a house.

There are, however, minimum credit score requirements to take out a mortgage loan. These requirements differ based on the type of loan you want to obtain.

Here are the loan types and the required credit scores.

Conventional Loan: 620

Conventional loans are the most common loans and have a minimum credit score of 620. For those who may want the best interest rates, a score of 740 and above will help.

Conventional loans are suitable for borrowers with high credit scores who can provide a down payment of 3% or more. They also provide the best interest rates and flexible repayment periods of 8 to 30-year loan terms.

Conventional loans aren’t federally insured, but they follow standards set by Fannie Mae and Freddie Mac, government-sponsored mortgage loan lenders. There are conventional loans that do not follow the standards established by these organizations, termed ’’jumbo’’ loans, which we’ll discuss later in this article.

Conventional loans are obtained through credit unions, mortgage brokers, and mortgage lenders. They are popular because of their simple approvals and low-interest rates.

FHA Loan: 580

FHA loan is the earliest mortgage loan program, designed by the Federal Housing Administration in the 1930s to make homeownership achievable.

FHA mortgage loans require a credit score of at least 580 and a down payment of as low as 3.5%, making them easily accessible than other loans. They also offer low-equity refinances that let you refinance up to 97.75% of the property’s value.

FHA loans are covered by the Federal Housing Administration, making qualification easy and allowing lenders to administer low-interest rates.

FHA loans specifically tend to attract first-time homebuyers who have either a young or lousy credit history partly because of the lenient credit requirements of FHA loans.

You see, with an FHA loan, you can qualify for a mortgage with a FICO score of even 500, but with such a low score comes some significant drawbacks.

First, you’ll require a down payment of at least 10%. Secondly, this type of loan is considered a subprime loan, meaning you might get the least favorable terms and end paying high-interest rates. Finally, you ought to have some very low qualifying ratios, that is, your overall debt-to-income ratio and your housing expense ratio.

All in all, the higher your credit score is, the more benefits you’ll accrue out of an FHA loan.

VA Loan: Not Specified

The VA loan is a type of mortgage insured by the Department of Veterans Affairs. The Department of Veterans itself doesn’t issue VA loans: they decide who is eligible for one and the lenders to issue it. It can be a clever move if you meet the requirements.

The requirements are that you must be an eligible veteran, service member, or a surviving spouse. A Certificate of Eligibility(COE) is a document issued upon proof of your claim to show your loan lender that you are, in fact, eligible for a VA loan.

VA loans don’t need any down payments and lack an industry-set minimum credit score requirement to obtain it though many lenders opt for a score of 620.

VA loans have simple credit requirements and offer more benefits than conventional loans, for example, the lack of down payment, more lenient credit requirements, lower interest rates, and no monthly mortgage insurance.

However, VA loans charge a one-time funding fee, which varies based on your down payment, the number of times you have chosen a VA loan, the type of service you logged, and the type of loan.

If you don’t provide any down payment on your first VA loan, you will receive 2.3% of your loan amount as the funding fee, whereas if you provide a 10% down payment on your house, you will receive 1.4%.


The U.S Department of Agriculture develops USDA mortgage loans to make homeownership in eligible rural and suburban areas accessible.

Like the Department of Veterans Affairs backs VA loans, the Department of Agriculture backs USDA loans.

USDA provides three main loan programs:

  • USDA Loan Guarantees issued by participating mortgage lenders and offer minimal down payments and low-interest rates.
  • USDA Direct Loans issued by USDA for eligible low-income persons with interest rates of 1%.
  • USDA Home Improvement Loans issued to qualified homeowners to improve the state of their homes.

The credit score requirement to obtain a USDA loan is not official though most mortgage lenders prefer a score of 640 and higher to receive streamlined processing. Lower than that may subject you to more stringent underwriting standards.

USDA loans are specifically for low-income families, so for you to be eligible, your adjusted gross income mustn’t be above 115% of the median income in the area.

Your lender will also look into your debt-to-income ratio before approving you for a loan. The recommended DTI is typically 43% or lower.

USDA may be an excellent option if you are looking for a zero percent down payment mortgage and don’t qualify for a VA loan.

Jumbo Loan

Jumbo loans are meant to finance homes that are too costly for a conventional conforming mortgage loan.

They surpass the loan limit set by Fannie Mae and Freddie Mac; for this reason, they are referred to as conventional non-conforming mortgage loans. Lenders of this loan, therefore, take a risk in case of defaulted payments as Fannie Mae and Freddie Mac don’t insure them.

There is no fixed credit score requirement, but the non-conformance to loan limits makes mortgage lenders consider a minimum score of 700 for approval. The higher your credit score, the better the mortgage rate you will get. 

Depending on income and credit, you may require a down payment of between 5 and 25 percent. Compared to conforming loans, jumbo loans may charge higher interest rates depending on your financial status and the lender.

Jumbo loans also have higher closing costs because the loans are bigger and contain other extra qualification procedures.

Final Word

If you were wondering what is a good credit score to buy a house? This article has made it clear that the credit score requirements to buy a house vary depending on the mortgage loan you choose.

The higher the credit score requirements, the better the mortgage plan you get.

Other than the credit score, there are other considerations worth looking into, such as the debt-to-income ratio, income and assets, and the loan-to-value ratio.

This article offers insights designed to help prospective home buyers understand what loan type corresponds with their credit score to buy a house in 2022.

Do you need help with your credit score? Credit score experts at Ebony Credit can help. Book an appointment today for a free consultation.

Scroll to Top