Credit score requirements for home purchases vary by loan type, lender, and current market conditions. Here’s a comprehensive breakdown of what’s considered good enough for different mortgage options:
Conventional Loans (backed by Fannie Mae or Freddie Mac):
- Minimum required: 620
- Good range for approval: 660-739
- Excellent for best rates: 740+
- Down payment impact: Lower scores typically require higher down payments (10-20% versus 3-5% for higher scores)
FHA Loans (insured by Federal Housing Administration):
- Absolute minimum: 500 (with 10% down payment)
- Standard minimum: 580 (with 3.5% down payment)
- Good for best terms: 620+
- Realistic minimum for many lenders: 620-640 (many FHA lenders impose overlays above FHA minimums)
VA Loans (for eligible veterans and service members):
- No official minimum from VA
- Typical lender minimum: 620
- Good for best terms: 660+
USDA Loans (for rural properties):
- Automated approval minimum: 640
- Manual underwriting potential: 580-639
Jumbo Loans (for higher-priced properties):
- Typical minimum: 680-700
- Good for competitive rates: 720+
- Excellent for best terms: 760+
Beyond just approval, your credit score significantly impacts your interest rate. For example, a conventional loan applicant with a 660 score might pay 0.5-0.75% higher interest than someone with a 760+ score. On a $350,000 mortgage, this difference could cost over $100,000 in additional interest over a 30-year term.
If your score isn’t ideal for your preferred loan type, consider working on credit improvement for 3-6 months before applying, or explore alternative loan programs better suited to your current credit profile.