What Credit Score Do You Need to Buy a House?

I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

credit score to buy a house
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Buying your first home is arguably one of the most important decisions you’ll ever make in your life. Having a good credit score will go a long way in making this process simpler and more affordable. 

But what credit score do you need to buy a house?

You need a credit score of 620 or above to buy a house using a conventional loan. A credit score lower than 620 will cause your loan to be rejected or attract exorbitant interest rates. Alternatively, you can try other loans with different credit scores, such as FHA, VA, and USDA.

In this article, I’ll explain the different types of loans available to finance your house, the different credit scores required, and the steps you can take to improve your credit score.

If you’re considering buying a house with mortgage financing, then keep reading until the end. 

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Loan Types Available to Finance Your Home

Three main loan types are available to finance your home:

  • Conventional loans
  • FHA loans
  • VA loans
  • USDA loans

Although conventional loans are available to homebuyers, these loans aren’t protected by any government. To qualify for a house loan, a home buyer needs a credit score of at least 620.

Conventional Loans

Conventional loans are loans extended to homebuyers through banks, credit unions, mortgage companies, or private lenders. However, these loans are not secured by any government entity. 

To access these loans, you’ll need to fill out an application form and provide relevant documentation, along with your credit history and credit score. This documentation includes:

  • Your proof of income
  • Evidence of stable work history
  • A record of assets, including investment account statements and bank statements
  • Your social security number

Because any government entity does not back these loans, conventional loans typically attract higher interest rates than those backed.

Who Are Conventional Loans Suited For?

Conventional loans are suited for applicants with higher credit scores who already have savings for a down payment. Accordingly, applicants must have a credit score of 620 or above to apply for these loans. 

Because any government entity does not secure these loans, these banks feature more stringent lending requirements. They also have a fixed interest rate, which tends to be higher relative to the other kinds of loans available. 

The initial down payment for these loans is 20% of the price of the house.

FHA Loans

FHA stands for Federal Housing Administration.  FHA loans are loans extended to home buyers but are insured by the federal government.

These loans can either be issued through banks or lending institutions which have to be approved by the Federal Housing Administration. 

FHA loans require a relatively small down payment and a lower credit score than conventional loans. Accordingly, the minimum credit score you need to access these loans is 580.

Who Are FHA Loans Suited For?

FHA loans are suited for families categorized under low or moderate-income, allowing them to afford homes. If you’re a first-time home buyer, an FHA loan is the most affordable home financing loan you can access.

These loans require a significantly lower credit score because they’re secured by a government agency and can offer up to 96% of your house’s value if you meet the required credit score. 

For prospective buyers with a credit score of 580 or higher, your down payment will only be 3.5% of the house’s value. 

FHA loans are also accessible to those with a lower credit score between 500 and 579. However, there’s a catch; you’ll have to pay a higher down payment when taking the FHA loan, equivalent to 10% of the house’s value. 

VA Loans

VA loans are mortgage facilities available through the United States Department of Veteran Affairs’ program. These facilities are therefore only accessible to active or retired service members.

The facilities also extend to their spouses.  Accordingly, these loan facilities are backed by the United States government. These loans are issued through private lenders, such as mortgage companies and banks.

According to Rocket Mortgage, these loans don’t have a minimum set credit score. However, some private lenders, such as Rocket Mortgage, require a minimum credit score of 580.

Therefore, it’s crucial to confirm if your lending partner has a minimum set credit score.  Some of the key features of these loans include low-interest rates.

As explained by Homebuyer.com, VA loans attract the lowest interest rates in the market and won’t need you to provide a down statement.  

Who Are VA Loans Suited For?

VA Loans are suited for military veterans, active service members, and their spouses. You’ll need to provide a certificate of eligibility to apply for this loan, which the VA can only issue to ascertain that you’re either a veteran or active service member. 

Another attractive feature of these loans is that they provide up to 100% financing and don’t feature any prepayment penalties.

USDA Loans

USDA loans are mortgage facilities backed by the United States Department of Agriculture (USDA) and intended to help low-income persons living in rural areas to afford a home. 

This mortgage facility is aimed at helping low-income families in rural areas who are otherwise not able to access conventional loans. Most lending institutions that extend these loans require a minimum credit score of 640.

While it’s possible to access these loans even with a lower score, you’ll significantly increase your chances if you have this minimum credit score or higher

Who Are the USDA Loans Suited For?

USDA loans are suited for people classified as low-income families. Additionally, the house in question must be within an area classified as rural and measure 2,000 sq. ft. (185.81 sq. m) or less. 

The USDA backs up to 90% of the house’s value. Because USDA guarantees this loan, it doesn’t require a down payment. 

You need to submit your application via the United States Department of Agriculture Rural Development to apply for this loan.


Depending on the type of loan you have access to, you can get a mortgage with a credit score as low as 580. However, having a higher credit score will increase your chances of getting the loan, and you may also benefit from comparatively lower interest rates.

I'm Donny. I'm a world traveler, investor, entrepreneur, and online marketing aficionado who has a big appetite to compete and disrupt big markets. I thrive on being able to create things that impact change, difficult challenges, and being able to add value in negative situations.

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