Credit Score Requirements for Mortgages: What You Need to Know
Learn the credit score requirements for different mortgage types, how to prepare your credit for a home loan, and what lenders look for.
Key Takeaways
- Different loan types have different credit requirements
- Lenders use your middle score from all three bureaus
- Higher scores = lower interest rates
- Improving credit before applying can save thousands
- Fix errors on your report before applying
Credit Requirements by Loan Type
Different mortgage programs have different minimum credit score requirements:
| Feature | Conventional | FHA | VA |
|---|---|---|---|
| Min score | 620 (typically) | 500-580 | No official min (620 typical) |
| Best rates | 740+ | 680+ | 700+ |
| Down payment | 3-20% | 3.5-10% | 0% |
| PMI required | If under 20% down | Yes (MIP) | No |
Conventional Loans
Backed by Fannie Mae and Freddie Mac. Most common mortgage type.
- Minimum score typically 620
- Best rates at 740+
- Private mortgage insurance (PMI) required if down payment under 20%
- Lower PMI rates with higher credit scores
FHA Loans
Government-backed loans designed for first-time and lower-credit buyers.
- 580+ with 3.5% down payment
- 500-579 with 10% down payment
- Mortgage insurance required for the life of the loan
- More lenient on past credit issues
VA Loans
Available to veterans and active military. One of the best loan programs.
- No official minimum score
- Most lenders require 620+
- No down payment required
- No PMI required
USDA Loans
For rural property purchases. Income and location restrictions apply.
- Typically 640+ required
- No down payment required
- Low mortgage insurance
How Mortgage Lenders Evaluate Credit
The Tri-Merge Report
Mortgage lenders pull your credit report from all three bureaus and create a "tri-merge" report. They typically use your middle score.
Example: Middle Score
If your scores are: Experian 720, Equifax 690, TransUnion 705
Your middle score is 705 (the one in the middle)
For joint applications, lenders often use the lower of the two borrowers' middle scores.
Beyond the Score
Mortgage lenders also look at:
- Payment history (especially recent)
- Collections and charge-offs
- Bankruptcies and foreclosures
- Credit utilization
- Recent credit inquiries
- Debt-to-income ratio (separate from credit score)
Preparing Your Credit for a Mortgage
Check Your Credit Reports
Get reports from all three bureaus. Review for errors, especially inaccurate late payments, wrong balances, or accounts that aren't yours.
Dispute Any Errors
File disputes for any inaccuracies. Start this process 3-6 months before applying for a mortgage to allow time for resolution.
Pay Down Balances
Reduce credit card balances to lower your utilization. Aim for under 30%—ideally under 10%. This can quickly boost your score.
Don't Open New Accounts
Avoid opening new credit cards or loans in the months before applying. New accounts lower your average age and create inquiries.
Don't Close Accounts
Keep existing accounts open. Closing cards reduces available credit and can increase your utilization ratio.
Become Current on All Accounts
If you have any past-due accounts, bring them current before applying. Recent late payments are more damaging than old ones.
How Your Score Affects Your Rate
Your credit score directly impacts the interest rate you'll receive:
Sample Rate Differences (30-Year Fixed)
- 760+ score: Lowest rates available
- 700-759: +0.25-0.5% higher
- 660-699: +0.5-1.0% higher
- 620-659: +1.0-1.5% higher
The Math Matters
On a $300,000 mortgage, a 1% higher interest rate costs approximately $60,000 more in interest over 30 years. Improving your credit score before buying can literally save tens of thousands of dollars.
Preparing to Buy a Home?
Credit report errors can cost you thousands in higher mortgage rates. Fix errors before you apply to get the best possible rate.
Frequently Asked Questions
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