What does my credit score need to be?
Your credit score is one of the most critical pieces for buying a home. Most lenders and government organizations require minimum credit scores for different lending products. In essence, lenders use your credit score to determine how likely you are to pay back your loan.
Credit scores not only qualify you for specific loans and programs, but also impact the interest rate you are offered. The higher your credit score, the better your interest rate in most cases. Remember, a lower interest rate means a lower monthly mortgage payment and less money out of your pocket each month.
While different lenders will require different minimum credit scores, there are some general rules of thumb we tend to go by. You’ll want to doublecheck with your lender to see what their specific credit score requirements are.
500 Minimum
- Most likely will not qualify for down payment assistance programs.
- Will qualify for FHA loans offered by some but not all lenders but with stricter debt limits.
- Will not get you a preferable interest rate.
580 Minimum
- Will qualify you for some down payment assistance programs.
- Will qualify you for FHA loans offered by more lenders.
- Will not get you a preferable interest rate.
620 Minimum 🎯
- Will qualify you for most down payment assistance programs.
- Will qualify you for FHA loans offered by almost all lenders.
- Will qualify you for most Fannie Mae loans offered by most lenders.
- As you increase your score beyond 620, you might begin to get more preferable lending like higher debt-to-income limits and potentially better interest rates.
760+ 🤩
- You will qualify for FHA and Fannie Mae loans as long as your debt-to-income ratio isn’t abnormally high.
- You will likely get better interest rates from lenders as your score increases from here.
Ready to start working on your credit?
