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Home loans that I can get with a 620 credit score – Find out here!

The first thing that many people most likely check for when they decide that they want to buy a house is their FICO Score. After all, more people will be bound to purchase real estate with the help of a home loan when you think about how astronomical home prices have grown in 2021.

Now that you know your credit score, you probably want to know what options there are out there mortgage-wise.

Today, we’re going to share with you the credit score needed to qualify for the most common home loans available on the market. You’ll be glad to know that at this point, you’re already in a safe place to qualify for a mortgage.

By the end of this article, we hope to give you a better idea of each loan type’s minimum credit score requirements so that you can arrive faster at the mortgage that’s best for you. Read on!

Is 620 a good credit score to buy a house?

To make sure that you already see the whole picture, however, you must know where a 620 credit score really stands on the FICO scoring range.

FICO Scores are the most common credit rating used by the major credit reporting bureaus: Experian, Equifax, and TransUnion. They really start at 300, with the highest score you can get being 850. According to Experian, almost everyone actually has a credit score above 500, so as you’ll learn later, getting a home loan is really achievable, especially with the help of government-backed mortgages. However, because people with FICO Scores below 500 are truly few and far between, having at least a 500 FICO Score is still not enough reason for celebration.

These are the credit score ranges according to the Fair Isaac Corporation:

  • 300 to 579 are Very Poor
  • 580 to 669 are Fair
  • 670 to 739 are Good
  • 740 to 799 are Very Good
  • 800 to 850 are Exceptional

As you can see, a credit score of 620 really only puts you a little over the Very Poor bracket. But surprisingly, Fair credit scores are usually enough to qualify for a mortgage insured by the government.

What are the 620 credit score home loans I can choose from?

You probably know this already, but your credit score is not the only criterion mortgage lenders consider when deciding if you should be lent money. Of course, since you want to buy a house, we’re talking about an enormous amount of money here, so you can’t really blame them! Other factors like how many assets you already have, your debt-to-income ratio, and your employment history are also considered before you are approved for a loan.

Depending on how you rate on these other factors and some other conditions, here are some of the types of loans you can avail of with a 620 credit score.

1 – USDA Loan

There actually is a type of loan that doesn’t particularly focus on your credit score during the loan application process. Instead, if you have a credit score of less than 640, the mortgage lender will want to examine your financial circumstances in a process called manual underwriting.

This is because it’s a mortgage insured by the U.S. Department of Agriculture. To promote the sale and use of rural land in the U.S., this government agency guarantees a mortgage that does not ask for a down payment, so if you were already planning to buy a property outside the city, this might be the best opportunity for you! Of course, you have to make sure that the property you are buying is in a USDA-recognized rural area, so you can check here if you are unsure.

Since you will be getting a mortgage guaranteed by a government agency, you will need to use this house as your primary residence and not for any commercial purposes.

2 – FHA Loan

Since we need to cover all of our bases, we’re also sharing this next loan type you can avail of with the credit score you already have. This is the most basic kind of mortgage that many people end up getting, although we would not recommend it as the best type of loan for a 620 credit score.

Needless to say, the FHA loan is insured by the Federal Housing Administration, and it is essentially meant to keep an option available for first-time home buyers. But, of course, you don’t necessarily have to be a first-time home buyer either. Since many first-time homebuyers do tend to have lower credit scores, however, the presence of this option is necessary for the mortgage loan market.


The minimum credit score required to avail it is only a 500 credit score, and with this minimum credit score, you’ll need to prepare at least a 10% down payment based on your home’s purchase price. Ten percent may still sound a bit steep, but the good news is, the FHA doesn’t require borrowers to get this down payment from their own savings. Instead, you can get help from down payment assistance programs or even accept cash gifts from relatives and friends who want to help you purchase a house.

If you have a minimum FICO score of 580, you can also be allowed to make as low as a 3.5% down payment, so you can see why it can be a very attractive option for many consumers who don’t have enough savings. In addition, with an FHA loan, you’ll be allowed to borrow most of the money needed to buy the house you want anywhere in the country, and almost everyone will also be eligible to apply.


Now it’s time to discuss why we cannot highly recommend this loan type for you since you have a credit score of 620. Although it might seem like a good deal to be able to borrow up to 96.5% of the money needed for your house, you have to remember that doing so will mean that you’ll be paying more in interest. Aside from interest, there are also more fees attached to FHA loans that will make your mortgage more expensive than other types of loans.

When you get a mortgage through the FHA, you will be obligated to pay for what’s called mortgage insurance. But this is not the kind of insurance that will be useful for you as a homeowner. Instead, this insurance is really only meant to protect the mortgage lender on the off chance that you default on your loan. Aside from the principal of the debt and the interest, you’ll be paying for this mortgage insurance premium monthly over the whole life of your loan. So there’s no getting out of it, even if you already own your house 90 percent.

Now, paying for insurance because you’re borrowing money is actually reasonable when you think about it. But we don’t recommend getting an FHA loan if you qualify for another type of loan anyway, since you have to pay for this insurance for a very long time. As you’ll find out in the next type of loan we’ll discuss, you can even get out of paying for mortgage insurance altogether with other loan types.

3 – Conventional Loan

If you’re not getting a government-backed loan, you’ll be getting what’s called a conventional loan. This is the traditional type of mortgage that’s also sometimes referred to as your Fannie Mae and Freddie Mac loan because these institutions set the loan limits this type of mortgage has to observe.

Unlike FHA loans, conventional loans typically require a credit score of at least 620, but so that you know, not all mortgage lenders treat this as a rule. Some lenders set their own credit score requirements, so while you might be rejected for a conventional loan by one lender, you might also be approved by the next lender you’ll speak to.

The great thing about conventional loans that makes them better than FHA loans is while you will also need to pay for insurance (this time called private mortgage insurance), the insurance for conventional loans does fall off once you reach at least 22% home equity. So now, if you have 20% of the home’s purchase price to begin with, you can also deposit a 20% down payment to avoid mortgage insurance altogether. This can save you thousands of dollars in insurance over the life of your loan, compared to if you take an FHA loan that will charge you for insurance for this whole period.

For conventional loans, the higher your credit score, the more money you can also borrow and the better interest rate you can get. So aside from ensuring that you will qualify with the credit requirements of more lenders, you’ll also be accessing better terms for your conventional loan if you can improve your credit.

How to get higher credit scores

The bottom line is, you’ll definitely qualify for a lot of mortgages out there now that you have a FICO score of 620. But if you really want to get the best terms for your deal, you will need to work on your credit score just a little bit more to get it up to the Good range. If it reassures you to hear, this is certainly doable, and in fact, we’ll be talking about a few strategies below that will help you raise that credit score in as fast as a few weeks.

Credit Cards

If you already have credit cards, make sure that you’re only using up to 30% of your credit limit because your credit utilization ratio is very important to your credit score and your home loan application. Also, see to it that you’re also paying your credit card bills on time, and you’re not leaving any money in your balance that’s going to make you pay interest.

If you don’t have credit cards yet, we recommend you get yourself to become an authorized user on someone else’s card. This is 100% legitimate, and you might want to look it up. Just remember to pick someone close to you who already know has a Very Good to Exceptional credit score.

Credit Report

This should go without saying, but you really need to check your credit report and take it more seriously. You might be surprised, but it’s not rare to find a mistake or two in peoples’ credit reports.

If you do find any, make sure you dispute them so that they can be taken off your credit report and fast.

Checking your credit report will help you clean up your credit history and keep you motivated and grounded as you go on your credit-boosting journey.

We wish you the best of luck!

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