Buying a House

Can I Get a Mortgage with My Current Credit Score?

June 2, 2014 / Meg Stefanac
Man confused about credit score

When you are ready to buy your first home, you will most likely need to finance your purchase through a mortgage. If your credit history isn’t very long or if you’ve had some financial snafus over the years, you may be wondering if you will be able to qualify for a mortgage. Your credit score isn’t the only thing that mortgage companies look at, but it plays a very important role in determining whether or not you will be approved for financing.

So, how high should your credit score be to buy a house? That can vary according to the mortgage you are applying for and the type of interest rate you hope to get.

What Is a Credit Score?

Your FICO® credit score is a number that gives lenders an idea of your credit worthiness. The exact way in which this score is calculated is proprietary, but it is based on your payment history, your debt to credit ratio, the amount of money you owe, and the length of your credit history.

These scores range from 300 to 850; anything above 750 is considered excellent, and anything below 550 is considered poor. According to Jessi Hall at Veterans United, “FICO no longer releases the median nationwide score, but at the last reporting in 2006, the national median FICO score was 723.”

How Can I Find Out how High My Credit Score Is?

You can obtain copies of your credit report from each of the three major credit reporting bureaus for free once a year. However, even though your credit score is based on the information these agencies have about you, and is calculated by each of them individually, it is not included with the free reports. To have this bit of information available to you, you must often pay a nominal fee of about $15 per credit score.

This does not mean that you cannot get your credit score for free, though. There are some credit card providers that will include a FICO credit score with each billing statement as a courtesy to their customers. These companies will frequently advertise this service, so if you see it offered, consider applying for a card. That way you can monitor your credit score on a monthly basis at absolutely no cost to you.

What Should My Credit Score Be to Buy a House?

A high credit score will often qualify you for a lower interest rate, so if you want to ensure that you get the best possible rate on your mortgage, you might want to wait until you build your credit score up to at least 740. But what if you want to buy a house now and your credit is less than stellar? You may still be able to get a loan at a higher rate so long as your credit rating is not poor.

Some kinds of mortgages have minimum credit score requirements. According to M.C. Postins at, these requirements are:

  • For a traditional mortgage:  Mortgage lenders take into consideration a number of factors that can vary from one financial institution to the next. However, a score of at least 650 will usually be high enough to qualify you for financing. Applicants with scores of 740 or higher are typically offered the best interest rates.
  • For a Fannie Mae mortgage: In 2009, The Washington Post reported that this government-backed mortgage provider raised its minimum credit score requirement from 580 to 620, and that is where it stands today. A credit score of 620 will not guarantee you mortgage approval, though. As Don Rafner of Everyday Life cautioned, “If your loan-to-value ratio is greater than 75 percent, you’ll need a minimum FICO score of at least 680.”
  • For an FHA Loan: These mortgages are backed by the Federal Housing Administration and provide a way for lower-income individuals to obtain a mortgage with a low down payment.  The FHA currently requires a minimum credit score of 580, but will make exceptions for those using FHA 203(h) Mortgage Insurance for Disaster Victims. These individuals may be able to qualify with credit scores as low as 500. The FHA will not approve anyone with a credit score lower than 500.
  • VA Loans: These loans, which are available only to current or retired members of the military and their surviving spouses, have rather lax credit requirements. While they do not have a minimum credit score requirement, they may still turn down an applicant who has extremely poor credit. However, the government wants to help military personnel and veterans, and therefore offers the Veterans United’s Lighthouse Program, which is designed to help those with poor credit improve their ratings.

Can I Improve My Credit Score?

The good news is that you can improve your credit score; the bad news is that it won’t happen overnight.  The most important thing is that you continue to pay all of your bills on time. Also, do not limit credit card payments to the minimum payment due. Pay your debts down as much as you can reasonable afford to each month. The lower your overall debt and the better your payment history, the higher your score will become.

When you are ready to buy a house, be sure to speak with a local independent insurance agent in the Trusted Choice® network to get help finding a competitively priced home insurance policy. Believe it or not, an improved credit score can even impact your insurance rates.

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