Part of the home mortgage loan application process is a review of your credit history and credit score, so a common question is, “What kind of credit score do I need to buy a home?”
This is a fair question. And while we’ll give you some general guidelines, the very best answer will come from a mortgage lender who can look at your specific financial situation and give you an answer specific to you.
You don’t need to have perfect credit to qualify for a mortgage. You may not even need “good” credit. This is why …
Equifax defines a credit score as “a three-digit number, typically between 300 and 850, designed to represent your credit risk, or the likelihood you will pay your bills on time.”
The score is calculated using information such as your payment history, how much debt you have, the length of your credit history, and sometimes your income.
Credit scores are broken down into ranges like this:
- 300-579 = Poor
- 580-669 = Fair
- 670-739 = Good
- 740-799 = Very Good
- 800-850 = Excellent or Exceptional
Minimum Credit Score Needed to Buy a Home
There are different types of mortgage loans that you can use to buy a home. And each has a different minimum credit score required.
- Conventional Mortgage Loans require a minimum credit score of 620, which falls into the “fair” category.
- FHA Mortgage Loans (developed by the Federal Housing Administration) require a minimum credit score of 580 and a 3.5% down payment.
- VA Mortgage Loans (backed by the Department of Veterans Affairs) require a minimum credit score of 580 and a Certificate of Eligibility that shows that you are a veteran or an active-duty servicemember.
- USDA Mortgage Loans require a minimum credit score of 620 and can only be used for non-urban home purchases.
- Jumbo Mortgage Loans require a minimum credit score of 680 and a down payment of 5%-25%. These are for loans larger than allowed under the other loan programs ($647,200 in 2022 for a single-family home in most areas of the United States).
These are general guidelines only. Some lenders may approve you for a mortgage with a lower credit score. It all depends on your specific situation. So, it’s always best to talk to a mortgage loan officer to see for sure what you qualify for.
And, of course, if you are paying cash and buying a home without a mortgage — as is the case if you are writing an all-cash offer — your credit score doesn’t really matter at all.
Looking to Buy a Home in Fresno?
If you’re looking to buy a home in Fresno, we’re here to help!
Send us a message or call us at 559-490-0207 today to start the conversation.