What Credit Score Do You Need to Buy a House? It Depends on a Few Factors

What Credit Score Do You Need to Buy a House? It Depends on a Few Factors

What credit score do you need to buy a house? Knowing the answer to this critical question can save you a lot of time if you are on the market. Here are some of the factors you need to consider.

You’ve been casually searching the internet for the house of your dreams. Maybe you don’t know exactly what it will look like, but you know that when you see it, it will be obvious.

Buying a home is part of the American Dream, but if you are like the majority of Americans and have debt, you might be wondering if you would qualify for a mortgage, and if you do, what would your interest rate be? Will your dream ever become reality? It might be easier than you think.

Let’s break it down.

What Credit Score Do You Need to Buy a House? The Type of Loan You Get Matters

Qualifying for a mortgage loan is not one-size-fits-all. Different loans exist for different purposes, and depending on which type of loan and lender you go with, you might already have the credit score you need to qualify.

For conventional loans, which are not backed by any governmental agencies, the minimum credit score that meets Fannie Mae and Freddie Mac underwriting guidelines is 620. But there are other options that are backed by the government that may be a better fit for your situation.

USDA Loans

Did you know that the Department of Agriculture provides home loans? If you earn low-to-moderate income and live in a rural area, you could qualify for this type of loan.

A USDA loan does not set a minimum credit score for borrowers to qualify, but some lenders who provide the loan may set different minimums.

FHA Loans

The Federal Housing Administration provides potential borrowers with one of the lowest minimum credit score requirements. For loans with a 3.5% down payment, the minimum is 580. If you go with a 10% down payment, you only need a score of 500 to qualify.

VA Loans

If you are a veteran, you could also go with a loan backed by the U.S. Department of Veteran Affairs. The VA, like the USDA, does not have a minimum credit score requirement.

Will You Qualify for a Low Interest Rate?

What credit score do you need to buy a house? That’s not the only thing you should be worried about.

When you are searching for a home, the matter of qualifying for a loan is not the only issue you should focus on. If you cannot get a good interest rate, it is worth taking the time and effort to raise your score so that you can pay less interest over the life of your loan.

You should try to get your credit score into the “good” range, typically ranging from 670 to 740. If you are already within that range, why not try to get an even better interest rate by pushing toward the “very good” range?

Start Improving Your Credit Score Today to Qualify for the Home of Your Dreams!

Are you ready to finally buy a home that fits your needs? Don’t wait any longer to start working toward your goal? At U.S. Credit Defense, we work with creditors to get you the credit score you deserve. Get in touch with us today so that we can discuss your needs.