What is the lowest credit score you can have and still buy a house?

Generally speaking, you'll need a credit score of at least 620 in order to secure a loan to buy a house. That's the minimum credit score requirement most lenders have for a conventional loan.

quickenloans.com - The Ideal Credit Score To Buy A House In 2023 - Quicken Loans

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Conventional Mortgages

Conventional mortgages are home loans that follow the standards set by Fannie Mae and Freddie Mac, but aren’t insured by any government agency. This type of financing is typically best for those with good or excellent credit, as these loans require a higher credit score than government-backed loans. Conventional loans also tend to offer the most competitive interest rates and flexible repayment periods, from 8- to 30-year mortgage terms.

Minimum Credit Score Needed For A Conventional Mortgage

As we said, most lenders – including Rocket Mortgage – require a minimum credit score of 620 for a conventional mortgage.

FHA Loans

FHA home loans are insured by the Federal Housing Administration, making them less risky for lenders and, because of this, easier to qualify for than conventional mortgages. They also offer down payments as low as 3.5% and low-equity refinances, which allow you to refinance up to 97.75% of your home’s value. FHA loans can benefit borrowers with lower credit scores or those who spend a significant portion of their income on housing. Current homeowners who are underwater on their mortgages – and could lower their monthly payment by refinancing – may also benefit from an FHA loan.

Minimum Credit Score Needed For An FHA Loan

You’ll need a minimum credit score of 580 to qualify for an FHA loan that requires a down payment of just 3.5%. There is no minimum FICO® Score, though, to qualify for an FHA loan that requires a down payment of 10% or more, but some lenders may set their own minimum. For instance, the minimum FICO® Score for an FHA loan through Rocket Mortgage is 580. However, FHA loans are originated by private lenders, and these lenders will usually have their own minimum credit score requirements. For instance, the minimum FICO® Score for an FHA loan through Rocket Mortgage® is 580. For a standard FHA loan, a minimum of one credit score is required to qualify. If your lender obtains all three of your credit scores, it will use the middle score for consideration. If you apply for a mortgage with your spouse, lenders will use the lower of the two middle credit scores.

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VA Loans

If you meet the requirements, a VA home loan, insured by the U.S. Department of Veterans Affairs, can be a smart financial move. That’s because these loans don’t require any down payment at all. They're also available to borrowers with lower credit scores.

The difficult part is meeting the eligibility requirements:

You must be an eligible member or veteran of the U.S. Military, or a member or veteran of the U.S. Military Reserves or National Guard. Spouses of military members who died while on active duty or because of a service-related disability can also apply for one of these loans. VA loans allow you to finance up to 100% of the home’s purchase price without making you pay for private mortgage insurance (PMI). VA loans, though, do have a one-time funding fee. This fee varies depending on your down payment, the type of loan, how many times you’ve chosen a VA loan and the type of military service you logged. For instance, if you don’t make a down payment and it’s your first VA loan, your VA funding fee will be 2.3% of your loan amount. However, if you were to put 10% down on your home, your funding fee would be 1.4%. Veterans that receive a disability rating from the VA don’t have to pay the funding fee.

Minimum Credit Score Needed For A VA Loan

The VA has no minimum credit requirement. With Rocket Mortgage, borrowers applying for VA loans must have a minimum FICO® Score of 580.

USDA Loans

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The U.S. Department of Agriculture offers USDA home loans to help promote rural development. To qualify for this type of mortgage, you’ll need to purchase a home that is a single-family residence and is located in an eligible rural location. Your income also can’t be more than 115% of the area’s median household income. USDA loans are popular among repeat and first-time home buyers alike because they don’t require a down payment and offer low interest rates. Plus, borrowers can finance their closing costs and pay off their mortgage early without a prepayment penalty.

Minimum Credit Score Needed For A USDA Loan

The USDA doesn’t have a set minimum credit score for home buyers, but lenders can specify their own. Many lenders require a credit score of 640 or higher for initial approval. However, you could be approved with a lower credit score, depending on your situation.

Jumbo Loans

A jumbo loan is similar to a conventional mortgage except that the loan amount exceeds the conforming limits set by the Federal Housing Finance Agency (FHFA). In preparation for 2023, the FHFA set the conforming loan limit to $715,000. If you live in a high-cost area, such as Hawaii or Alaska, the limit is $1,073,000. Jumbo loans typically require a low debt-to-income ratio and high credit score. You’ll also need a substantial amount of cash reserves to be approved for a jumbo mortgage.

Minimum Credit Score Needed For A Jumbo Loan

Since jumbo mortgages allow such a high loan amount, lenders can be stricter about their minimum credit score requirements. For Rocket Mortgage, you’ll need at least 700 if you choose a 15-year fixed- or adjustable-rate Jumbo Smart loan. But you could qualify with a credit score of 680 for a 30-year fixed-rate jumbo loan.

quickenloans.com - The Ideal Credit Score To Buy A House In 2023 - Quicken Loans

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