Whats a Good Credit Score to Buy a House ?

Owning your own home can often be a wise investment, plus you don’t have a landlord breathing down your neck about what you can and can’t do. But what a good credit score to buy a house?

The Federal Housing Administration, or FHA, requires a credit score of at least 500 to buy a home with an FHA loan. A minimum of 580 is needed to make the minimum down payment of 3.5%. However, many lenders require a score of 620 to 640 to qualify.

With a conventional loan for a house that's backed by Fannie Mae or Freddie Mac, for example, the minimum score required is set at 620. But the lowest credit score to buy a house with an FHA loan is 580.

We’ve got the answers, plus some extra tips on how to seal the deal no matter what kind of credit score you have to buy a house.

How does your credit score affect buying a home?

Your credit score affects your ability to buy a home as a major factor in whether or not you’re approved for a mortgage. Weighing all of the items on your credit report, such as payment history and amounts owed, a complex calculation then creates your credit score to give lenders a better idea of how you handle your finances. That’s because your credit score is a reflection of how likely you may be to default on your loan.

An interest rate of even just ¼ percent less can save you a lot of money over the course of a 30-year loan. So it’s clear that your credit score is an important factor not just for getting approved for a mortgage, but also for getting the best rates to lower your monthly payments.

Is there a credit score minimum for buying a house?

For conventional loans, which come with the strictest lending standards, you’ll need at least a 620, but with an FHA loan, the minimum is just 580. Different lenders have different requirements depending on how much risk they’re willing to take on a loan

What else do you need to buy a house?
In addition to your credit score, your lender looks at a few other factors to approve your home loan. Not only does the lender look at your financials, they’ll also check out the actual home you’re purchasing.

If you’re seriously considering purchasing a home, start setting these documents aside in a safe place so you have them ready to give to your lender when the time comes.

Before making an offer, check with your lender on what types of properties you can consider to avoid making an offer you can’t follow through on.

Can you get a mortgage with bad credit?

Government-sponsored programs like FHA loans specifically cater to borrowers with lower credit scores. You can still get a mortgage even if you have bad credit, although you’re likely to pay a much higher interest rate to compensate for the increased risk to the lender.

How can you fix bad credit to qualify for a mortgage?

You can fix your credit score so that you can buy a house. Get started by ordering copies of your credit report.

First, check to make sure that all the information is 100% accurate. Ask an existing creditor to extend your maximum amount on one of your current credit cards.

If you have a lot of negative items on your report and feel overwhelmed, you might consider hiring a credit repair company.

Even if you don’t have the bare minimum credit score to qualify for a mortgage, there are a lot of ways to buy a house.