What Credit Score Do You Really Need to Buy a House?

By Jenny Mateyoke

As your professional real estate advisor, I focus on client satisfaction. My business is about service and I am not happy until you are happy. My years in the business have provided me the experience to assist you with nearly every real estate need.

When buying a home, your credit score is one of the most important factors lenders consider. It’s essentially your financial report card, giving lenders a snapshot of how well you’ve managed your debts in the past. A higher credit score signals that you’re a responsible borrower, increasing your chances of getting approved for a mortgage and securing better loan terms.

Despite the significance of credit scores, many homebuyers overestimate the minimum score needed to qualify for a mortgage. According to a report from Fannie Mae, only 32% of consumers have an accurate understanding of what lenders actually require. This means that nearly two-thirds of people might be making decisions based on incorrect information.

So, what credit score do you really need? The answer varies depending on the type of mortgage and the lender’s specific criteria:

• Minimum Credit Score Range: According to Experian, the minimum credit score to buy a house can range from 500 to 700.
• Conventional Mortgage: Most lenders require a minimum score of 620 for a conventional mortgage.
• Lender Variations: Each lender has its own criteria. While many use FICO scores to make decisions, there isn’t a universal cutoff. Some may accept lower scores depending on other factors.

This means that even if your credit score is not perfect, you can still get approved for a home mortgage as long as your credit score is above the minimum required by lenders. However, if your credit score isn’t where you want it to be, it does not mean you can no longer do anything.

To raise your credit score, follow these steps: Pay all bills on time, including credit cards and utilities. Reduce your outstanding debt to lower your credit utilization ratio. Avoid applying for too much credit to prevent temporary score drops from hard inquiries.

Your credit score plays a crucial role in the home-buying process, but even if it’s not perfect, there are still pathways to homeownership. Different lenders have different requirements, and there are options available for various credit levels. Being informed and prepared will help you make the best decisions for your financial future.

If you need help in exploring your options to become a homeowner, reach out to us at 859-533-9427 and we’ll help you.