The minimum credit score you need for a mortgage depends on the type of loan you get.
But it also depends on the lender you’re using.
In this article you will find the lowest score you need for each program and how to find lenders offering loans to buyers with the minimum scores.
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You don’t need a 620 Credit Score to get Approved
There are many different types of mortgage programs that all have their own score score requirements.
Here are the typical minimum credit requirements for each type of loan. Remember, that not all lenders will accept the same scores.
Typical Minimum Credit Scores Required
- FHA Loans – 580 Credit Score
- USDA Loans – 640 Credit Score
- 203k Loans – 620 Credit Score
- Convention Loans – 620 Credit Score
- Jumbo Loans – 700 Credit Score
- FHA Streamline Refinance – No Credit Check
- VA Streamline Refinance – No Credit Check
- Cash-out Refinance – 640 Credit Score
- HARP – 620 Credit Score (Some lenders do not have a minimum credit score)
- Home Equity Loan or Line of Credit HELOC – 680 Credit Score
FHA Home Loans
With the lowest minimum credit requirement of any mortgage, FHA loans are hands down the best type of mortgage for borrowers with bad credit.
The Federal Housing Administration has set the minimum credit guidelines needed for them to ensure a mortgage.
With at least a 500 credit score the FHA will insure a loan with a 90% loan-to-value ratio, 10% down payment.
With a FICO score of 580 or higher, the FHA will insure the loan with just a 3.5% down payment.
FHA Unlikely with a Score Below 580
If your credit score is below 580, it’s recommended that you take some time repairing your credit before applying.
For borrowers with a 580 credit score, you could qualify for an FHA loan with just 3.5% down.
First-time home buyers
First-time buyers have lower FICO scores than the typical home buyer on average, making FHA loans a great option for first-time homebuyers.
FHA loans also require a very low down payment of just 3.5% of the purchase price. They even allow up to 100% of the purchase price to be a gift from a friend or relative.
First-time Home Buyer Programs and Grants
The U.S. Department of Urban Housing (HUD) has many different first time home buyer grants and downpayment assistance programs available.
Search for available programs in your state on the HUD website.
You can also check your local county Government website to check if the have any programs available for home buyers.
The Veterans Administration does not do not have a minimum credit score requirement to guarantee a loan.
Lenders set their own credit guidelines for VA loans.
You will find that most mortgage companies will require a 640 or better score. However, there are some lenders that can work with lower scores, even below 580 in some cases.
USDA Loans are for people who live in rural areas that are in eligible USDA zones.
The US Department of Agriculture does not require a down payment to qualify.
Another great benefit to USDA loans is that mortgage insurance premiums are $100 less a month on average when compared to FHA MIP.
USDA Loans require a credit score of at least 640. Because USDA mortgages offer 100% financing, most lenders are not flexible with this requirement.
203k loans are great for people who want to buy a home that needs repairs.
A standard 203k loan will allow you to purchase a home, and get cash to make major repairs, such as foundation or plumbing system repairs.
A streamline 203k loan is for homes that need minor repairs, such a cosmetic upgrades.
They require a downpayment of just 3.5% and a minimum credit score of 620 is needed.
Conventional loans are not guaranteed by the federal government, they are offered by private banks and lenders.
Because of this the lender is taking on more risk, meaning the requirements to qualify for a conventional loan are higher than FHA loans.
The minimum score you need for a conventional loan is usually 620, other lenders will require higher scores.
The downpayment on a conventional loan is between 5% and 20% depending on the size of the loan and your credit score.
You are required to pay PMI on a conventional loan only if you do not put at least 20% down.
Tips to Improve your credit score before you applying for a mortgage
Pay off your credit card balances
Credit utilization ratio is the balance of your credit card compared to the credit limit.
If you have a credit card with a $1,000 credit limit and the balance is $500, you have a credit utilization ratio of 50%.
Try to pay down your credit card balances below 15%, this will ensure your credit scores are the highest they can be before you apply with a mortgage lender.
Become an authorized user
Banks allow you to add someone to your account to be an authorized user.
If you are added as one on an account with good payment history, they entire account will appear on your credit report, usually within 45 days.
FICO does count authorized user accounts when factoring your credit score.
This is a simple way to add 20-30 points to your credit score quickly.
Finding Lenders that Help Low Credit Score Home Buyers
Since lenders do not have to go by the FHA minimum credit score requirements, not all lenders will be willing to accept less than a 620 score for FHA Loans.
Yet, there are mortgage lenders who will work with applicants with credit scores of 580.
Finding the right lender can take time, so getting help can make it easier for you to move quickly into home ownership.
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The Lenders Network has the largest network of mortgage lenders that specialize in home loans for borrowers with all types of credit scores. We will match you will the best lender based on your specific situation.