Buying a home feels like a dream. However, to make that dream real, you must know the credit score needed to buy a home. Many buyers guess, yet misunderstandings are common. In this article, you will learn clear, actionable information about credit score requirements in 2025. Plus, you’ll discover how to improve your score before applying. Best Option Mortgage is here to guide you every step of the way.
The Credit Score Needed to Buy a Home: Why It Matters
Your Credit Score and Mortgage Approval
Your credit score matters because lenders use it to judge risk. If you have a strong score, you may qualify for better rates. On the other hand, a lower score could lead to higher interest or even rejection. Therefore, knowing the credit score needed to buy a home is vital.
Minimum Requirements Vary by Loan Type
Different mortgage types have different credit score requirements:
Conventional loans from Fannie Mae or Freddie Mac often require 620+.
FHA loans may be available with scores as low as 580 (with 3.5% down), but 500‑579 scores are possible with 10% down.
VA loans usually don’t have a firm minimum, but many lenders look for 620+.
USDA loans often require 640+ for eligibility.
Each program demands a different threshold. If your score is below, you’ll need to improve or explore alternate loan types.
Why 620 is Often the Magic Number
Conventional loans typically require at least a 620 credit score. That number often serves as the dividing line for favorable interest rates. When you reach or exceed it, lenders see you as a lower risk and offer better terms.
However, even FHA loans, although more lenient, require a defined threshold. And rates rise sharply below 620 in most cases.
Hence, while 580 might qualify for FHA, it often still costs more. That is why aiming for 620+ is smart.
How Credit Score Affects Your Mortgage Rate
Interest Rate Differences
A higher credit score means a lower interest rate. Just a few points above or below a cut‑off can change your monthly payment by hundreds.
For example:
A 620 score might get you a 4.5% rate
A 700 score might secure 3.8%
That difference adds up over the life of a 30‑year mortgage. As a result, raising your score by just 50 points could save you thousands.
Loan Options and Flexibility
With better scores, you also unlock more loan options. For instance, you may qualify for jumbo loans or special programs for first-time buyers. Conversely, lower scores limit choices and often require more documentation or larger down payments.
Thus, improving your credit score opens doors and saves money.
What Credit Score Do You Really Need to Buy a Home?
Conventional Loans (620+)
As mentioned, most conventional loans require at least 620. That level is a threshold for standard underwriting and better interest rates.
FHA Loans (580–619 vs 500–579)
An FHA loan is more forgiving:
580+ → 3.5% down payment
500–579 → 10% down payment required
But those lower‑score borrowers face higher monthly costs. Consequently, reaching 580 or above is worth aiming for.
VA Loans (Flexible, Often 620+)
Veterans and active-duty borrowers may qualify more easily, but lenders tend to prefer credit scores of 620 or higher. Rates and perks improve at that level.
USDA Loans (640+)
Rural homebuyers using USDA loans typically need a score of 640+ to qualify. Some lenders may go lower with compensating factors, but it’s rare.
Portfolio Loans and Non‑QM Products
Some lenders offer custom loans for borrowers with scores below 620, using additional income documentation. However, these often carry higher rates and fees. They might suit self-employed borrowers or those in unique circumstances.
Tips to Improve Your Credit Score Before Buying
1. Review Your Credit Report
Obtain credit reports from the three major bureaus (Equifax, Experian, TransUnion). Check for errors or outdated information. Dispute inaccuracies right away.
2. Pay Bills on Time
Payment history makes up 35% of your credit score. Late payments can drag your score down for years. Make every payment on or before the due date to steadily build positive history.
3. Reduce Credit Utilization
Keep credit card balances low, ideally below 30% of your available limit. Lower utilization helps boost scores quickly.
4. Avoid Closing Old Accounts
Age of credit history matters. Keep older accounts open unless they cause problems or fees.
5. Limit Hard Inquiries
Multiple credit applications can lower score. If possible, apply for credit wisely and space out applications.
6. Add Alternative Data
Rent payments, utilities, and subscriptions reported on-time may help if reported by a credit bureau.
Case Studies: Credit Scores in Action
Scenario 1: Buyer with 640 Score
Marisol scored 640 and applied for a conventional loan with 5% down. She qualified with a decent rate—significantly better than FHA terms. As a result, she saved monthly and over the life of the loan.
Scenario 2: Buyer with 580 Score
Carlos had 580 and chose an FHA loan. He put 3.5% down but ended up paying a higher rate and upfront mortgage insurance. Still, he qualified and moved into his home. Later, once his score rose, he refinanced to lower his rate.
Scenario 3: Buyer with 720 Score
Jenny scored 720, had minimal debt, and chose a conventional loan with 10% down. She received one of the lowest rates in her area and avoided private mortgage insurance (PMI). Her monthly payments were minimal compared to FHA borrowers.
These stories show why aiming for a better credit score always pays off—in lower rates, more options, and greater flexibility.
Faster Ways to Raise Your Score
Pay Down Revolving Debt
Lowering credit card balances can boost utilization ratio quickly. Even a few hundred dollars can make a difference.
Become an Authorized User
If someone with good credit adds you as an authorized user on their credit card, that history can boost your score.
Negotiate or Remove Errors
Sometimes bureaus or lenders will remove collections or late payments if you negotiate or file a dispute.
Use Credit‑Boost Tools
Some services report timely utility or rental payments to credit agencies. That added history can help.
When You Can Still Buy with a Lower Score
Subprime and Non‑QM Options
Non‑prime loans or portfolio lenders may approve scores below 620. These loans often require higher fees, interest, or down payment.
Compensating Factors
Strong income, large down payment, or substantial cash reserves can offset lower credit scores in many cases.
Co‑Signers
A co‑signer with good credit might help you qualify. However, both parties are at risk and both credit histories are affected.
However, these routes may cost more—and require thorough review.
Pre‑Approval: What Lenders Check
When you apply, lenders look at:
Credit score and credit report
Debt‑to‑income (DTI) ratio
Assets and down payment source
Employment and income history
Even with a lower credit score, strong income and financial stability can help you get pre‑approved. But better credit still means better rates and terms.
Timeline: Improving Your Score Before Applying
3–6 Months Prep
Start raising your score as early as possible. Actions like paying down card balances and fixing errors take time to reflect.
1 Month Before Application
Stop applying for new credit. Keep balances low and ensure all payments are on time.
At Application Time
Aim to have a stable score above key thresholds—ideally 620 for conventional or USDA, 580 for FHA, or better.
How Best Option Mortgage Can Help
We explain the credit score needed to buy a home in your situation
We connect you with loan options—even if your score is lower than 620
We help you prepare documents and guide you through pre‑approval steps clearly
Our team works with borrowers across California and beyond. We navigate the process so you can focus on your dream home.
Frequently Asked Questions
What credit score is typically required for a conventional mortgage?
Most lenders require a score of at least 620.
Can I get a home loan with a 580 score?
Yes—FHA loans allow 580+ scores with 3.5% down but you’ll face higher costs.
Will a 500 credit score disqualify me?
Not necessarily. FHA allows scores down to 500 with 10% down. Non‑QM or subprime lenders may still help you—but rates will be higher.
Is it better to wait until I reach 700 before applying?
If time allows, yes. Rates and savings get significantly better above 700.
How long does it take to raise my score from 580 to 620?
It depends, but paying off revolving debt and fixing errors can raise it within a few months.
Ready to Take the Next Step?
If you’re wondering about the credit score needed to buy a home, don’t worry: Best Option Mortgage is here to help. Whether your score is 500 or 700‑plus, we tailor advice and mortgage options to your situation.
We can help you:
Understand your score
Improve it wisely
Choose the right loan program
Navigate pre‑approval and closing smoothly
Borrowers from California and other states trust us because of our experience, licensing, and caring approach. Contact us today.
Ready to see how your credit score stacks up? Contact Best Option Mortgage now to get pre‑approved and explore your mortgage options—even if your credit score isn’t perfect yet. Let’s turn your homeownership dream into reality together.
——
Best Option Mortgage is a DBA of ML Mortgage Corp. ML Mortgage Corp. is a state‑licensed mortgage lender, NMLS ID #362312, licensed by the CA Department of Financial Protection and Innovation under the Finance Lenders Law, License #60DBO69831. For other states, visit www.mlmortgage.net. To verify licenses, visit www.nmlsconsumeraccess.org. All loans are subject to credit approval and acceptable collateral. Additional terms and conditions apply. Programs, rates, terms, and conditions may change without notice. Not all programs are available in all states. There is no guarantee that all borrowers will qualify. Restrictions may apply. This is not a commitment to lend. © 2025 ML Mortgage Corp. All rights reserved.