What Credit Score Do You Need to Buy a House? | Home Loan Tips 2025
Dreaming of buying your first home but worried your credit score might hold you back? You’re not alone. Many first-time homebuyers wonder, “Is my credit score good enough to buy a house?” You don’t need a perfect score to buy a home. In fact, it’s possible to get approved with a credit score as low as 500! yes, really. But the better your score, the more money you can save on interest, fees, and even insurance over the life of your loan. So, let’s unpack what your credit score actually means for your homeownership journey and how to make it work for you, not against you.
What Credit Score Do You Need to Buy a House?
Generally speaking, a credit score in the high 600s to 700s will position you well for most mortgage types, offering better interest rates and loan terms. A score above 800? That’s considered exceptional and puts you in the best possible spot.
However, don’t panic if your score is on the lower side. Some loan programs are specifically designed to help borrowers with less-than-perfect credit. FHA loans, for instance, allow scores as low as 500 (with a larger down payment), and many lenders will still consider your application if you’re at or above 580.
Also read: The Shifting Buyer’s Market in 2025: What Homebuyers Need to Know
Why Your Credit Score Matters in Home Buying
Your credit score is like your financial report card. Lenders use it to decide two things:
- Can you qualify for a mortgage?
- If so, what kind of interest rate and loan terms do you get?
Even a small improvement in your score can lead to major savings. A difference of just 0.25% in interest could save you thousands over the life of your loan.
How Mortgage Lenders View Your Credit Score
When you apply for a mortgage, lenders check your FICO score, which ranges from 300 to 850. This score is generated from the data in your credit report collected by the three major bureaus—Experian, Equifax, and TransUnion.
Your mortgage FICO score is broken down like this:
- Payment history – 35%
- Credit utilization – 30%
- Length of credit history – 15%
- Credit mix – 10%
- New credit activity – 10%
The stronger your credit history in these areas, the higher your score.
Buying with a Partner? Here’s What You Need to Know
When applying for a mortgage jointly with a partner, lenders will consider both applicants’ credit scores but they’ll base the decision on the lower middle score between the two of you.
Let’s say your scores are 720, 740, and 760, and your partner’s are 640, 660, and 680. The lender will go with your partner’s middle score of 660 as the deciding factor.
Pro tip: If one of you has significantly better credit, consider applying solo just know that you’ll also need to qualify on one income alone.
Minimum Credit Score Requirements by Loan Type
Different types of mortgage loans have different credit score thresholds:
| Loan Type | Minimum Score Needed | Notes |
| Conventional | 620 – 660 | Lower rates, but stricter qualifications. |
| FHA | 500 – 580 | Lower scores okay with higher down payments. |
| VA | 580 – 620 | For veterans and active-duty military; no mortgage insurance. |
| USDA | 580 – 620 | For rural homes, no down payment needed. |
| Jumbo | 680 – 700 | For high-value homes; typically needs 20% down. |
Other Key Factors Lenders Consider
While your credit score is important, it’s not the only piece of the puzzle. Lenders will also review:
Income & Assets
Be ready to show your W2s, tax returns, bank statements, and proof of income.
Employment History
Stable employment history (usually 2+ years) helps demonstrate your ability to repay.
Debt-to-Income (DTI) Ratio
DTI measures how much of your income goes toward debt payments. Here are general limits:
| Loan Type | Max DTI Ratio |
| Conventional | 50% |
| FHA | 55% |
| VA | 70% |
| USDA | 55% |
| Jumbo | 43% |
Loan-to-Value (LTV) Ratio
This measures how much you’re borrowing compared to the home’s value. A lower LTV means a bigger down payment and can help you avoid mortgage insurance.
How to Improve Your Credit Before Buying a Home
Not quite ready to apply? Use this time to clean up your credit. Here are simple steps that can make a big difference:
- Pay down delinquencies: Start by clearing any overdue accounts or accounts in collections.
- Use automatic payments: Avoid late payments by setting your bills to auto-pay.
- Lower credit utilization: Keep your credit card balances below 30% of your limit.
- Keep old accounts open: Longer credit histories help your score.
- Avoid new hard inquiries: Limit applying for new credit in the months before your mortgage application.
Where to Check Your Credit
You can request free copies of your credit report from all three bureaus at AnnualCreditReport.com. Also, many banks and credit cards offer a VantageScore, which isn’t exactly the same as your FICO score, but still a helpful ballpark figure.
Can You Still Buy a Home with Bad Credit?
Yes, you absolutely can. While a low score may mean higher interest rates or a bigger down payment, programs like FHA loans are built to help people in your shoes. The key is to start early, understand your options, refer to expert advice from real estate guest posting sites and talk to a lender who can guide you through solutions that work for your specific situation.
Final Thoughts
Buying a home is a huge milestone but your credit score doesn’t have to stand in the way. Whether you’re working toward improving your score or already in good shape, understanding how your credit impacts your mortgage options puts you in control.
The sooner you start prepping your credit, the smoother your path to homeownership will be. Ready to take the first step? Check your credit, explore your loan options, and talk to a lender who can help you plan your next move.
