Minimum Credit Score Needed for a Mortgage: What You Should Know

Key Takeaways

1. 620 is the magic number for conventional loans, but FHA, VA, and USDA loans can offer more flexible options for borrowers with lower scores.

2. Government-backed loans carry lower minimums because the lender’s risk is partially guaranteed, while jumbo loans require higher scores due to larger loan amounts.

3. Your credit score drives your mortgage rate even a 0.25% difference can cost or save you thousands over the life of a loan.

4. Other factors matter too: debt-to-income ratio, down payment, employment history, and credit utilization all influence approval and terms.

5. Improving your score before applying pays off, a 20–40 point increase can mean better loan options, lower monthly payments, and significant long-term savings.

Introduction to Credit Scores and Mortgages

Buying a home is exciting but before you start imagining furniture layouts and weekend barbecues, there’s a gatekeeper you need to get past: your credit score. For most conventional loans, the minimum credit score needed is 620. That’s the baseline number many mortgage lenders look for before they’ll approve you for a loan with competitive terms.

If your score is lower, don’t panic. Government-backed loans like FHA loans, VA loans, and USDA loans are designed to make homeownership more accessible, even for people with poor or fair credit. For example, FHA loans backed by the Federal Housing Administration, allow scores as low as 500 if you can make a 10% down payment, or 580 with just 3.5% down.

Your credit score is a three-digit summary of your credit history, and it plays a massive role in whether lenders see you as a safe bet. It influences your interest rate, loan type, monthly payments, and even how much negotiating power you have with the lender. That’s why checking your credit report with all three major credit bureaus: Experian, Equifax, and TransUnion, before applying is essential.

The higher your score, the more doors open for you: lower interest rates, fewer fees, and more mortgage options.

Understanding Credit Score Requirements

Credit score requirements are not one-size-fits-all, they depend on the loan type, the lender, and sometimes even your down payment amount.

1. Conventional Loan

A conventional loan is a mortgage that isn’t backed by any government agency. Instead, it follows the guidelines set by Fannie Mae and Freddie Mac, which are the two major government-sponsored enterprises (GSEs) that standardize mortgage lending. These loans are popular among borrowers with a good credit score and a stable income because they tend to offer competitive interest rates and flexible terms.

To qualify for a conventional loan, most mortgage lenders require a minimum credit score of 620. However, the best rates and terms are usually reserved for borrowers with a score of 740 or higher. Putting down at least 20% allows you to avoid private mortgage insurance (PMI) entirely, which can save you a significant amount over the life of the loan.

While conventional loans offer lower overall borrowing costs for creditworthy borrowers, they have stricter underwriting requirements than government-backed options. If you have a lower credit score or a high debt-to-income ratio, approval may be more difficult.

For example, Alex has a 720 credit score, steady employment, and a 20% down payment. This profile allows him to secure a low-rate, 30-year fixed conventional mortgage with no PMI, keeping his monthly payment affordable.

2. FHA Loan

An FHA loan, insured by the Federal Housing Administration, is specifically designed to help borrowers who have lower credit scores or smaller savings for a down payment. Because the government backs these loans, lenders are willing to offer financing to applicants who might not meet the stricter requirements of a conventional loan.

The minimum credit score for an FHA loan is 500 if you can put down 10% of the purchase price. If your score is at least 580, you can qualify with just a 3.5% down payment. This flexibility makes FHA loans a lifeline for buyers with poor or fair credit.

The trade-off is that you’ll have to pay mortgage insurance premiums (MIP) for the life of the loan unless you refinance into a conventional mortgage later. FHA loan limits also vary by county, so you’ll need to check if your desired property fits within the allowable range.

Dana, for instance, has a 560 credit score and can make a 10% down payment. A conventional loan isn’t an option for her, but an FHA loan allows her to buy now while she works on improving her credit for a future refinance.

3. VA Loan

A VA loan, guaranteed by the Department of Veterans Affairs, is one of the most valuable benefits available to eligible U.S. military veterans, active-duty service members, and certain surviving spouses. This program allows you to purchase a home with no down payment, no mortgage insurance, and competitive interest rates, even if your credit isn’t perfect.

While the VA doesn’t set an official minimum credit score, many lenders require at least a 620. Some will go as low as 580 if you have strong compensating factors, such as a low debt-to-income ratio or substantial savings.

The main limitation of VA loans is that they are only available to qualified military-affiliated borrowers. There’s also a VA funding fee, although this is waived for veterans with service-related disabilities.

Marcus, a retired Army sergeant, has a 605 credit score. Even though he wouldn’t qualify for a conventional loan, he can still purchase a home with zero down through a VA loan, saving thousands in upfront costs.

4. USDA Loan

A USDA loan is a government-backed mortgage guaranteed by the U.S. Department of Agriculture and intended for homebuyers in eligible rural and suburban areas. These loans offer 100% financing, meaning you can purchase a home with zero down payment.

The USDA doesn’t impose an official minimum credit score, but most lenders prefer to see at least 640. This is partly because USDA loans often use automated underwriting systems that work best with higher scores.

USDA loans also come with income limits, which vary by location and household size, and property location restrictions, the home must be in a USDA-designated area.

Emily, who has a 645 credit score and limited savings, purchases her first home in a USDA-eligible small town. With no down payment and reduced mortgage insurance costs, her monthly payments fit comfortably within her budget.

5. Jumbo Loan

A jumbo loan is a mortgage that exceeds the conforming loan limits set by Fannie Mae and Freddie Mac. These are common in high-cost housing markets where property prices surpass the standard limits. Because of the higher loan amounts, jumbo loans present more risk to lenders, which is why they have stricter requirements.

You’ll typically need a minimum credit score of 700 or even 720 to qualify for a jumbo loan, along with a larger down payment, often 10% to 20% or more. Lenders also look for a strong financial profile, including a low debt-to-income ratio and substantial cash reserves.

Priya, for example, is purchasing a $1.5 million home. With a 745 credit score, 25% down payment, and steady high income, she secures a jumbo loan at a competitive interest rate.

6. Reverse Mortgage (HECM)

A reverse mortgage, officially known as a Home Equity Conversion Mortgage (HECM), is a loan designed for homeowners aged 62 or older. Unlike a traditional mortgage where you make monthly payments to the lender, with a reverse mortgage the lender pays you, either as a lump sum, fixed monthly installments, or a line of credit.

The FHA insures most reverse mortgages, which means there is no strict minimum credit score requirement. However, lenders will still review your credit history to make sure you can keep up with property taxes, homeowner’s insurance, and maintenance obligations.

This type of loan can be a powerful financial tool for retirees who have substantial home equity but limited cash flow. The loan is repaid when you sell the home, move out permanently, or pass away. The main drawback is that it reduces the equity in your home, which could affect your estate’s value.

John, age 70, has a credit score of 580 and owns his home free and clear. He uses a reverse mortgage to access $200,000 of his equity, allowing him to cover medical expenses and supplement his retirement income without taking on monthly payments.

7. Home Equity Loan

A home equity loan allows you to borrow a lump sum of money using the equity in your home as collateral. It functions like a second mortgage with a fixed interest rate and set repayment schedule.

Lenders typically require a minimum credit score of around 620 to qualify, though a higher score will unlock better rates and terms. Because the loan is secured by your home, failing to repay it can lead to foreclosure, so it’s important to borrow responsibly.

Home equity loans are ideal for borrowers who need a large amount of money upfront for purposes such as debt consolidation, major home improvements, or large purchases. The fixed-rate structure makes budgeting easier since your monthly payments stay the same for the life of the loan.

Sarah, for instance, uses a home equity loan to pay off high-interest credit card debt. With her 680 credit score and steady income, she qualifies for a much lower interest rate than her credit cards, saving her hundreds of dollars per month.
 

8. HELOC (Home Equity Line of Credit)

A Home Equity Line of Credit (HELOC) is a flexible financing option that allows you to borrow against your home’s equity as needed, similar to how a credit card works. You can draw funds during a set “draw period” and only pay interest on the amount you’ve used.

HELOCs typically require a minimum credit score of 620 to 680, depending on the lender. They are particularly useful for expenses that occur over time, such as ongoing home renovations or tuition payments.

One consideration is that HELOC interest rates are usually variable, meaning they can go up or down over time. When the draw period ends, you enter the repayment period, which may result in higher monthly payments.

Mike opens a HELOC to fund a series of home upgrades over two years. With a 700 credit score, he qualifies for favorable terms and appreciates the flexibility of borrowing only what he needs, when he needs it.

9. Bank Statement Loan

A bank statement loan is tailored for self-employed borrowers who may have strong earnings but show reduced taxable income due to business deductions. Instead of tax returns, lenders use 12 to 24 months of personal or business bank statements to verify income.

These loans usually require a minimum credit score between 620 and 660. They often have slightly higher interest rates than conventional loans to offset the additional risk to lenders.

The advantage is clear: self-employed professionals can qualify based on their actual cash flow rather than taxable income, which might be artificially low after deductions. The trade-off is that you’ll typically need a larger down payment, often 10% to 20%.

Lina, a freelance graphic designer with fluctuating income, uses 24 months of bank statements to prove her earnings. Even without traditional tax documentation, she secures a mortgage that lets her buy a home sooner.

10. DSCR Loan (Debt Service Coverage Ratio)

A Debt Service Coverage Ratio (DSCR) loan is popular among real estate investors because approval is based primarily on the property’s ability to generate rental income rather than the borrower’s personal income. The DSCR compares the property’s net operating income to its total debt obligations.

Lenders typically look for a minimum credit score of 620 to 660 for DSCR loans. The higher your score and the stronger the property’s cash flow, the better your interest rate.

These loans are ideal for scaling a rental property portfolio without being constrained by personal debt-to-income limits. However, they often come with slightly higher rates and larger down payment requirements than traditional owner-occupied loans.

Tom, an experienced investor, purchases a rental home where the monthly rent easily covers the mortgage payment. His 675 credit score and the property’s strong DSCR make approval straightforward.

11. Asset Depletion Loan

An asset depletion loan (also known as asset-based lending) qualifies borrowers based on their liquid assets, such as savings, investments, or retirement accounts, rather than their employment income. Lenders divide the total value of these assets by a set term (often 240 months) to calculate a qualifying monthly income figure.

The typical minimum credit score is between 620 and 680. This type of loan is well-suited for retirees, high-net-worth individuals, or those who have significant investments but little regular income.

The main drawback is that you must have substantial liquid assets, and not all assets may count toward qualification.

Julia, a retired investor, has $1.2 million in brokerage accounts but no job income. Using an asset depletion loan, she secures a mortgage without needing to liquidate her investments.

12. FHA 203(k) Rehab Loan

An FHA 203(k) loan is a unique product that combines a home purchase or refinance with renovation financing in a single loan. It’s backed by the Federal Housing Administration and is intended for homes that need significant repairs or upgrades.

The minimum credit score is 500 with a 10% down payment, or 580 with 3.5% down. In addition to standard FHA underwriting, the property’s renovation plans must be approved, and repairs must be completed by FHA-approved contractors.

Carlos uses an FHA 203(k) to buy a fixer-upper for $200,000 and fund $50,000 in renovations. With one loan covering both purchase and improvements, he transforms the property without juggling multiple financing sources.

13. Construction Loan

A construction loan provides short-term financing to cover the cost of building a home. Once the home is completed, the loan can be converted into a permanent mortgage through a “construction-to-perm” structure.

Most lenders require a minimum credit score of 620, but you’ll get better terms at 680 or higher. Construction loans often require detailed plans, a licensed builder, and a clear project timeline.

Lisa, with a 690 score, secures a construction-to-permanent loan to build her dream home. The loan funds each phase of construction, and when the house is complete, it automatically converts into a standard mortgage.

14. Interest-Only Mortgage

An interest-only mortgage allows borrowers to pay only the interest portion of the loan for a fixed period (often 5 to 10 years) before principal payments begin. This results in lower initial monthly payments, which can help with cash flow management.

The minimum credit score for an interest-only loan is typically 700 or higher due to the increased risk for lenders. These loans are often used by investors, high-income earners with variable bonuses, or borrowers who plan to sell or refinance before the interest-only period ends.

Sam uses an interest-only mortgage to keep payments low while renovating and reselling a property. Once the home is sold, he repays the loan in full, avoiding the higher principal payments.

15. Adjustable-Rate Mortgage (ARM)

An adjustable-rate mortgage offers a fixed interest rate for an initial period (commonly 5, 7, or 10 years), after which the rate adjusts at set intervals based on market conditions.

Lenders generally require a minimum credit score of 620, though the most competitive rates are available to borrowers with 700 or higher. ARMs are ideal for borrowers who don’t plan to stay in their home long-term, as they can take advantage of the lower initial rate.

Tina, knowing she’ll relocate for work in four years, chooses a 5/1 ARM. Her starting interest rate is significantly lower than a fixed-rate mortgage, saving her thousands during the time she owns the home.

Why the difference?
Government-backed loans carry less risk for lenders because the government guarantees part of the loan. This allows them to accept lower credit scores. By contrast, jumbo loans which involve higher loan amounts, pose more risk, so lenders want higher credit scores to offset it.

How Your Credit Score Affects Mortgage Rates

Your credit score is more than just a “yes” or “no” for mortgage approval, it’s a key driver of your mortgage rate. Lenders use your score to assess the risk of lending to you. The higher your score, the less risk they see, and the better the rate they’ll offer.

Here’s what that can look like in numbers for a 30-year fixed mortgage on a $300,000 home loan:

A difference of just 0.25% in your interest rate can translate into thousands of dollars over the life of your loan. That’s why higher credit scores are such a powerful tool, they don’t just open the door to approval, they save you money every single month.

Tip: Think of your credit score as your “silent negotiator.” The higher your score, the more leverage you have with lenders.

Loan Options for Different Credit Scores

Your credit score not only determines whether you can get approved for a mortgage, but also which loan programs you qualify for and how much you’ll pay over time. Here’s how your options typically look at different score ranges, and what you can do to improve your position before you apply.

Poor Credit (Below 580)

If your score is under 580, you’re unlikely to qualify for a conventional mortgage, but you may still have options. The most accessible route is often an FHA loan, which can approve borrowers with scores as low as 500 if you can put at least 10% down. Some niche lenders also offer subprime mortgage loans, but these often come with significantly higher interest rates, larger down payments, and stricter terms.

At this level, the best strategy is to spend 3–6 months improving your credit before applying. Paying down high balances, disputing errors on your credit report, and making all payments on time can give you a better shot at approval and lower rates.

Fair Credit (580–619)

This range opens up more possibilities. You can qualify for an FHA loan with just 3.5% down if your score is at least 580. Depending on the lender, you might also be eligible for a VA loan (for military members and spouses) or a USDA loan (for rural and suburban buyers).

Your main goal here is to keep your credit utilization ratio low, ideally under 30% and avoid taking on new debt before applying. Even a small increase in your score could push you into the “good credit” range, where more competitive interest rates and loan options become available.

Good Credit (620–699)

Once you’re in the 620+ range, you qualify for most conventional mortgages, which often come with lower insurance costs and better long-term savings compared to FHA loans. You’ll also have access to VA and USDA loans, which can offer zero-down payment options.

With good credit, it’s important to shop around. Different lenders may offer varying interest rates and fees even for the same score, so comparing quotes can save thousands over the life of your loan.

Very Good to Excellent (700–850)

This is where you get the best of everything: the lowest interest rates, reduced fees, and access to premium loan products like jumbo loans and certain specialty mortgage programs. Lenders view you as a low-risk borrower, which gives you strong negotiating power.

If you’re in this range, don’t be afraid to push for better terms, your profile gives you leverage. You can also explore loans with more flexible repayment structures or lower down payment requirements while still receiving excellent rates.

Credit Score Ranges & Mortgage Loan Options

Factors Affecting Mortgage Approval Beyond Credit Score

While your credit score is a key part of getting a mortgage, it’s only one piece of the puzzle. Lenders look at your entire financial picture to decide whether to approve your application and what terms to offer you.

Debt-to-Income Ratio (DTI) – This measures how much of your gross monthly income goes toward debt payments, including the new mortgage. Most traditional loans require a DTI under 43%, although certain programs, such as FHA or VA loans, may allow higher ratios if you have compensating factors like strong savings or a high credit score. Lowering your DTI by paying off existing debt before applying can improve your approval chances.

Down Payment Size – The more you put down, the less risk the lender takes on. A larger down payment can sometimes offset a lower credit score, reduce your interest rate, and eliminate the need for mortgage insurance. For example, a borrower with a 620 score who can put 20% down may be seen as less risky than a borrower with a 680 score and only 3% down.

Employment History – Stability matters. Lenders typically want to see at least two years of continuous employment in the same field, as it signals steady income. Job changes within the same industry are usually fine, but frequent shifts or gaps in employment can raise red flags unless you can explain them with supporting documentation.

Credit Utilization Ratio – This is the percentage of your available credit you’re currently using. A low utilization ratio (ideally under 30%, and even better under 10%) shows lenders that you manage credit responsibly and aren’t over-reliant on debt.

Credit History Length – The longer your accounts have been open and in good standing, the more reliable you appear to lenders. A long credit history helps boost your score and gives lenders more data to evaluate your financial habits.

Available Credit – Having unused credit lines shows you have access to credit but don’t need to max it out. It demonstrates financial discipline and can improve your overall lending profile.

When lenders see a solid combination of these factors: even if your credit score isn’t perfect, it can make the difference between an approval and a denial, or between getting an average interest rate and securing a great one.

The Mortgage Application Process

Applying for a mortgage isn’t just filling out a form, it’s a multi-step process where lenders carefully evaluate your finances to determine whether you qualify and on what terms. Understanding each stage helps you prepare, avoid delays, and improve your chances of approval.

Pre-Approval – Your lender reviews basic financial details and credit to estimate how much you can borrow. This helps you focus your home search and shows sellers you’re serious.

Credit Report Review – The lender pulls reports from all three major credit bureaus, checking for on-time payments, reasonable credit utilization, and no recent major negatives.

Financial Documentation – You’ll submit proof of income (pay stubs, W-2s or tax returns), bank statements, and asset records. Gift funds require a signed letter from the donor.

Underwriting – The lender’s team verifies your financial profile, ensuring you meet loan guidelines. They may request additional documents or compensating factors.

Closing – You sign the final documents, pay closing costs, and the lender funds the loan. The keys are yours.

Alternative Credit – For borrowers with limited credit history, some lenders may also consider rent, utility, or insurance payment records.

Improving Your Credit Score Before Applying

If your credit score is close to the minimum requirement for your desired loan type, or falls below it, taking time to improve your score can open the door to better rates and loan options. Even a modest increase can make a big difference in your monthly payment and total interest over the life of the loan.

1. Start by paying all bills on time, since payment history makes up about 35% of your FICO score. Just one late payment can drop your score significantly, so set reminders or use automatic payments to stay on track.
2. Work on reducing your credit card balances to lower your credit utilization ratio, aim for under 30% of your available credit, and under 10% if possible. High balances relative to your limits can signal risk to lenders, even if you pay on time.
3. Avoid opening new credit accounts right before applying for a mortgage. Each hard inquiry can temporarily lower your score, and new accounts can reduce your average account age.
4. Check your free credit reports from all three major credit bureaus and dispute any errors. Incorrect late payments, balances, or accounts you don’t recognize can drag your score down unnecessarily.
5. Keep your oldest accounts open to preserve your length of credit history, closing them can shorten your average account age and reduce available credit.
6. Finally, aim for a healthy mix of credit types such as credit cards, auto loans, and installment loans, to show you can handle different types of debt responsibly.

Tip: Even a 20–40 point increase could qualify you for a better loan program or lower interest rate, potentially saving you thousands over time.

Conclusion

Your credit score is one of the most influential factors in your mortgage process. Understanding the minimum credit score requirements for each loan type can help you plan strategically and avoid surprises.

If you’re aiming for a conventional mortgage, 620 is your benchmark. For FHA loans, you can get approved with a lower score, especially if you can put more down. And if you’re a veteran or rural homebuyer, VA loans and USDA loans may give you even more flexibility.

The bottom line: Start preparing early. Improve your score where possible, compare multiple lenders, and choose the loan that best fits your situation. The effort you put into building your credit now will pay off for decades to come.

Frequently Asked Questions About Credit Scores and Mortgages

Q: What is the lowest credit score to get a mortgage?

The lowest score depends on the loan type. FHA loans allow scores down to 500 with 10% down or 580 with 3.5% down. Most conventional loans require at least 620. VA and USDA loans can be more flexible but often require 620–640+. Even if you meet the minimum, lenders still review your debt-to-income ratio, employment history, and overall credit profile before approving your mortgage.

Q: How rare is an 820 credit score?

An 820 score is considered elite, falling in the “exceptional” FICO range. Only about 20% of Americans have a score above 800. While moving from 800 to 820 doesn’t drastically change rates, it signals excellent financial management. Borrowers in this range typically get the best loan terms, lowest interest rates, and strongest negotiating position with lenders.

Q: What credit score is needed for a $250,000 house?

For a conventional mortgage, you’ll usually need a score of 620 or higher, though 700+ earns better rates. FHA loans allow scores as low as 500 with 10% down, or 580 with 3.5% down. Your income, debt-to-income ratio, and down payment amount will also influence approval and loan terms, so meeting the score alone isn’t enough.

Q: What credit score do you need to get a $30,000 loan?

For a personal loan or small mortgage of $30,000, lenders often want at least a 600 score, though some may go lower with strong compensating factors. For mortgage-related loans like home equity loans, 620+ is typical. The better your score, the lower your rate and fees, so improving your credit before applying can save significant money.

Q: Does a higher credit score always mean a lower interest rate?

Generally, yes, higher scores unlock better rates and loan terms. However, lenders also weigh factors like loan type, loan-to-value ratio, income stability, and debt-to-income ratio. A borrower with a high score but high debt might get a less favorable rate than one with a slightly lower score but stronger overall finances.

Q: Can I get a mortgage with no credit history?

Yes, but your options are limited. Some lenders use manual underwriting, considering alternative credit data such as rent, utility, and insurance payment history. FHA loans are often more flexible in these cases. You may need a larger down payment or a co-signer to offset the lack of traditional credit history.

Q: How long does it take to raise my credit score for a mortgage?

Small improvements can happen in 1–6 months by paying bills on time, lowering credit utilization, and avoiding new credit inquiries. Larger jumps, especially if you have negative marks, can take a year or more. Checking your credit reports for errors and disputing inaccuracies can sometimes deliver quicker score increases.

Q: What’s the average credit score for first-time homebuyers?

Recent data shows the average is around 746 for conventional loans and about 676 for FHA loans. These averages vary depending on the housing market, loan type, and borrower demographics, but they give a good benchmark for where most successful applicants fall.

Q: Will checking my credit score hurt it?

No, checking your own score is considered a soft inquiry and doesn’t affect your credit. Only hard inquiries from lenders, which occur when you apply for new credit, can temporarily lower your score. Monitoring your score regularly is a smart way to prepare for a mortgage application.