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What is the lowest credit score to buy a home?

Are you excited to buy a house? Well, the first thing you will have to know about is your credit score. Do you know what your credit score is? Have you tried researching what credit score do you need to get approved for a mortgage?

These are the pertinent questions you have to start asking yourself once you decide that it’s finally time to get that dream home. Let’s face it, house prices keep on going up, and if you pay in cash, who knows when you might come up short in the next emergency? So it’s just more reasonable at this time to get a mortgage so you can keep your money safe with you if you ever need it.

Today, we will help you decide which mortgage might be the best for you, according to your circumstances, plans, and credit score.

Let’s see if your credit score cuts.

Credit Scores and Mortgages

It is an accepted fact of life that if you need to borrow money because you want to buy a house, you will have to let mortgage lenders know your credit score. But what exactly are credit scores, and how do they figure into the mortgage loan process?

FICO Scores or VantageScores are basically measures of your credit risk as a borrower. For example, if you always pay your bills on time and in full, this makes you a good borrower, and this will reflect on your credit score. However, in the same logic, if you have a lot of missed payments or if you’ve ever declared bankruptcy, this can make you a risky borrower, and it will absolutely show on your credit report.

Since they will most likely not know you from Adam, mortgage lenders will need to know your credit score to help them decide if you should be allowed to borrow money. When you think about it, this is a fair and unbiased way to make this judgment so that race, gender, or other ways of discrimination will not factor into the equation. They will only be basing their decision on this measure of your past behavior.

Minimum Credit Score Requirements

As you will learn in this section, credit scores are just one of the things they look at to know if you qualify for a loan. Furthermore, your credit score greatly affects your total mortgage costs due to the down payment amount and the interest rate that you will be given depending on your score.

Whichever mortgage you choose based on your preferences, we recommend that you still do your best to work on improving your credit. Qualifying for the mortgage with the lowest minimum credit score requirements must never be your target. The higher your credit score, the more savings you will make, and the easier your life can become.


First, let’s talk about the mortgage loan that doesn’t actually ask for a minimum credit score.

The U.S. Department of Agriculture guarantees a loan program that seeks to promote the sale or use of land in more rural areas. To entice more people to buy a house in the countryside, they offer the USDA loan that neither has minimum credit score requirements nor ask for any down payment.

As long as you are an American citizen purchasing a house in an eligible location, you can try applying for a USDA loan.

FHA Loan

Since more people will actually want to buy properties in more urban areas, this next loan type is more popular, especially for first-time homebuyers.

As its name implies, the FHA loan is insured by the Federal Housing Administration, and it seeks to assist people who live on lower-income and who have lower credit scores on their reports. Almost anyone can qualify for a mortgage with FHA loans because the credit score needed to get approved is just a 500 credit score.

FHA loans require a minimum down payment of 10% from borrowers with credit scores ranging from 500 to 579. Ten percent may seem a little steep for some people, but the good news is that you can qualify for down payment assistance programs with an FHA loan because your down payment is not required to come from your own funds. And if you can even get a FICO Score of 580, you can be allowed to make as little as a 3.5% down payment.

However, this loan type does not come without its own caveats. FHA loans may pose a good opportunity for many people, but before you choose this type of mortgage, you have to be aware that they ask for mortgage insurance with premiums that do not fall off no matter how long you have been paying your mortgage home loan. Furthermore, people are lured to FHA loans due to the enticement of paying no down payment of their own through grants, and when you start with no equity at all in the matter, you’re basically starting from rock bottom. This means paying a lot more in interest for many, many years to come.

Conventional Loan

Often referred to as your Fannie Mae and Freddie Mac loan, a conventional loan is the exact opposite of a government-backed mortgage. With conventional loans, you will definitely have to make a down payment, and preferably, you will want to prepare at least 20% of your home’s purchase price to close this type of loan. Pay any less than this amount, and you saddle yourself with private mortgage insurance, which is similar to the mortgage insurance premiums, except that it falls off once you reach 22% home equity.

Conventional loans may be preferable to many people, especially if you have a credit score of 620 or higher. This is because with a conventional loan, you can borrow more money and pay a better interest rate just with the right credit score. However, do take note that although many lenders will be happy enough to approve your loan with a 620 credit score, others do require a much higher number. Therefore, it will be best if you try to go for a pre-approval from a conventional mortgage lender before you start shopping around for houses.

VA Loan

Even if you might already be eligible for conventional loans, which can have some of the better deals out there, you will definitely want to avail of a VA loan if you are a service member.

The Department of Veterans Affairs has this great job benefit for our veterans and those on active duty, and we are telling you, there are just no better offers elsewhere.

The VA loan program has the best interest rates in the mortgage industry, and the credit score required to avail of this loan is just 640, which is not even in the good range of the FICO scoring system. VA loans also do not ask for a minimum down payment, and there are always people you can ask for help at the VA when you start having trouble making payments.

Unfortunately, since VA loans are very exclusive to a specific group of people, more borrowers will not be able to avail of this loan. So if you are eligible, it’s almost a crime to pass this opportunity up! Could you do your best to apply for it?

The Lowest Credit Score to Buy a House

We know that the lowest minimum credit score to get a mortgage is actually the lowest credit score. But it will still be wrong to promise you that you can get approved for a mortgage on this factor alone, so instead of staying assured that you can get a home loan, we recommend continuing to work on your credit score, no matter where it is is at the moment.

According to the Federal Reserve, back in 2019, 90% of the mortgages approved in the first three months of that year were for borrowers with credit scores of at least 650, and a great majority (75%) of these borrowers had credit scores over 700. These numbers are already much higher than the minimum credit score requirements we have previously mentioned. With a credit score of 650, you’ll actually be eligible for all 4 mortgage types we were able to discuss.

Other Factors

It is important to remember that the minimum credit score required for a mortgage really depends on the lender. If you have a credit score of 620 and you are trying out for a conventional mortgage, your application can get rejected by one lender, but this does not mean that you should stop trying out for loans. In fact, you might found out that 2 or more other lenders would be willing to offer you a chance.

You will also find that lenders will require other factors to approve your loan application. For example, some lenders look for a particular debt-to-income ratio, which shows how much available income you’ll still have every month to accommodate another loan.

In your credit report, lenders will also look at your credit utilization ratio to find out if you’re already borrowing a lot of money from other lenders.

It’s not enough to improve your credit to qualify for more mortgage loans. These other factors will also help you improve your mortgage terms to negotiate better with your lender.

Finally, if you’re getting rejected even if you know your credit is in the eligible range, maybe you know your credit score from one institution. You must not forget to check your credit from all three reporting bureaus: Experian, Equifax, and TransUnion.

Many people may not know this, but you can actually get a different FICO Score from each of these companies. And if you get a 600 from Experian, a 616 from Equifax, and a 614 from TransUnion, your final credit score will not be 610, which is the average of these numbers. Instead, lenders will use the number 614 from TransUnion because it is the middle value among your credit scores to evaluate your application. So make sure you are referring to your correct credit score!

Lady with thumbs up sign

We hope you’ve learned a lot from this brief article. Remember, the mortgage process is intimidating not just to you but to all of the rest of us who want to get closer to our dream homes. However, you will find the right mortgage out there for you amongst all the options that will be offered.

Enjoy the journey, and good luck!

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