Your credit score is one of the most important factors in buying a home — it determines whether you qualify, what interest rate you get, and how much the loan costs over time. Understanding what credit score you need and how different loan programs work can save you tens of thousands of dollars over the life of your mortgage. This guide breaks down minimum requirements by loan type, shows exactly how your score affects your rate and monthly payment, and provides actionable strategies to improve your score before applying.
Minimum Credit Score by Loan Type
Different mortgage types have different credit score requirements. Government-backed loans (FHA, VA, USDA) generally have more flexible credit requirements than conventional loans, making homeownership accessible to more borrowers.
| Loan Type | Minimum Score | Down Payment | Best For |
|---|---|---|---|
| FHA | 500 (10% down) / 580 (3.5% down) | 3.5-10% | First-time buyers, lower credit |
| Conventional (Fannie/Freddie) | 620 | 3-20% | Good credit, lower PMI |
| VA | No minimum (most lenders: 620) | 0% | Veterans, active military |
| USDA | No minimum (most lenders: 640) | 0% | Rural areas, low-moderate income |
| Jumbo | 700-720 | 10-20% | Loans above $832,750 |
The minimum scores above are program minimums, but individual lenders may require higher scores. Shopping multiple lenders is important—some may approve you at 580 while others require 620 for the same FHA loan. Use a mortgage affordability calculator to estimate how much house you can afford at your current credit level.
How Credit Score Affects Your Interest Rate
Your credit score directly impacts the interest rate lenders offer. Lenders price in score bands, and a higher band means a lower rate and a smaller total interest bill.
| Credit Score (FICO band) | Rate (30-year fixed) | Monthly Payment ($300K loan) | Total Interest (30 yrs) |
|---|---|---|---|
| 780+ | 7.47% | $2,091 | $452,933 |
| 740+ | 7.62% | $2,122 | $464,046 |
| 720+ | 7.76% | $2,151 | $474,472 |
| 700+ | 7.79% | $2,158 | $476,714 |
| 680+ | 7.91% | $2,183 | $485,700 |
| 660+ | 7.93% | $2,187 | $487,201 |
| 620+ | 8.17% | $2,237 | $505,302 |
Source: myFICO Loan Savings Calculator, 30-year fixed mortgage, $300,000 loan, viewed October 14, 2026. Rates are what the calculator showed that day, not offers; the Freddie Mac PMMS 30-year average was 7.40% for the week of October 8, 2026.
A 780+ score vs. 620+ score = $146/month less on a $300K loan, or $52,369 less interest over 30 years, on the calculator’s figures.
Improving your score before you apply can lower the rate you are offered. If your score is near the bottom of a band, a few points can move you into the next one, so it can be worth checking where you stand before you apply.
Credit Score Ranges and What They Mean
| Score Range | Rating | Mortgage Eligibility |
|---|---|---|
| 300-579 | Poor | FHA only (10% down required) |
| 580-619 | Fair | FHA (3.5% down), limited conventional |
| 620-679 | Good | Conventional, FHA, VA, USDA |
| 680-739 | Very good | All loan types, good rates |
| 740-799 | Excellent | Best rates available |
| 800-850 | Exceptional | Best rates (same as 740+) |
PMI Costs by Credit Score
Private mortgage insurance (PMI) is usually required on a conventional loan with less than 20% down, and its price depends on your credit score and down payment. PMI rates vary by down payment and credit score, and are generally cheaper than FHA mortgage insurance for borrowers with good credit. This page does not quote PMI rates; ask lenders for a quote at your score and down payment, and compare it with the FHA premiums.
FHA vs. Conventional: Which Is Better for Your Score?
Which loan costs less depends on your score, down payment and the lender’s pricing. FHA allows scores as low as 580 with 3.5% down (500 with 10% down), while conventional loans generally start at 620. FHA mortgage insurance can last the life of the loan, while conventional PMI can be cancelled under certain circumstances. Get a Loan Estimate for each type and compare the total monthly cost.
FHA trade-off: Lower credit requirements but mortgage insurance lasts the entire loan (unless you refinance). Conventional PMI drops off at 80% LTV.
Many first-time buyers default to FHA loans, but if your score is 680+, run the numbers both ways. The lifetime cost of FHA mortgage insurance can exceed the upfront savings from a slightly lower rate. Understanding what hurts your credit score helps you avoid common mistakes while preparing for your purchase.
How to Improve Your Score Before Buying
The fastest way to boost your score is lowering your credit utilization—the percentage of available credit you’re using. Even if you pay your cards in full each month, your score reflects the balance on your statement date.
| Action | Potential Score Increase | Timeline |
|---|---|---|
| Pay down credit cards below 30% utilization | +20-50 points | 30-60 days |
| Pay down to below 10% utilization | +30-65 points | 30-60 days |
| Become an authorized user on old account | +15-30 points | 30-60 days |
| Dispute and remove errors | +25-100 points | 30-90 days |
| Pay off collections (pay-for-delete) | +25-75 points | 30-90 days |
| Don’t apply for new credit | Prevents drops | Ongoing (6-12 months) |
| Let negative marks age | +5-10 points/year | 12-24 months |
Timeline: Getting Mortgage-Ready
| Current Score | Target | Steps | Estimated Timeline |
|---|---|---|---|
| 500-550 | 580 (FHA) | Pay collections, lower utilization | 3-6 months |
| 550-600 | 620 (conventional) | Pay down balances, dispute errors | 3-6 months |
| 600-660 | 700 (better rates) | Lower utilization, age accounts | 6-12 months |
| 660-720 | 740 (best rates) | Fine-tune utilization, patience | 3-12 months |
What Lenders Actually Look At
| Factor | Weight | Details |
|---|---|---|
| Payment history | 35% | On-time payments on all accounts |
| Credit utilization | 30% | Balances vs. limits on revolving credit |
| Length of credit history | 15% | Age of oldest account and average age |
| Credit mix | 10% | Installment + revolving accounts |
| New credit inquiries | 10% | Hard pulls in last 12 months |
Mortgage shopping tip: Multiple mortgage inquiries within 14-45 days count as one hard pull on your credit score.
Key Takeaways
- Minimum score: 500 (FHA, 10% down), 580 (FHA, 3.5% down), 620 (conventional) — VA and USDA technically have no minimums
- Higher score bands get lower rates — on myFICO’s calculator (October 14, 2026) a 780+ score meant $52,369 less interest than a 620+ score on a $300,000 loan
- Compare FHA and conventional quotes — mortgage insurance and rate pricing differ by score and down payment
- Lenders set their own minimums — program minimums are a floor, not a promise
- You can improve your score 50-100 points in 3-6 months by paying down balances and fixing errors
- Check your average credit score to see how you compare nationally
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