What’s a good credit score to buy a house, and why does it matter?

Q: Which credit score do mortgage lenders actually use?

Mortgage lenders pull all three bureaus and use older FICO versions rather than the score in a free consumer app. With one borrower, they use the middle of the three scores. With two borrowers, they generally use the lower of the two middle scores. That is why the number your credit card app shows is often 20 to 40 points off the number your loan officer sees.

Q: How much does a higher credit score actually save?

Pricing tiers typically step at 20-point intervals, so moving from 680 to 700 or from 740 to 760 can measurably lower your rate. On a $300,000 loan, a 0.25% rate difference is worth roughly $46 a month and about $16,500 over 30 years. A higher score can also reduce private mortgage insurance premiums on conventional loans, which compounds the monthly savings.

Q: How fast can I raise my credit score before applying?

Paying down revolving balances is the fastest lever, and the change can post within one to two billing cycles. Keep utilization under 30% and ideally under 10%, do not close old accounts, and dispute reporting errors through the bureaus using your free reports. Avoid new credit accounts or large purchases during the mortgage process. A new auto loan can undo months of progress days before closing.

Written by Samantha SheltonNMLS 1647301Updated September 2026

Woman reviewing her finances at a kitchen table while preparing her credit score to buy a house

Rule change, November 2025: For loan casefiles created on or after November 16, 2025, Fannie Mae removed the 620 minimum credit score from Desktop Underwriter, its automated underwriting system. Conventional approvals now turn on a full risk assessment rather than one cutoff, though 620 still governs manual files and most lender overlays.

620 is still the number to aim at, and no longer the wall it used to be. FHA sets the lowest published government floor: 580 qualifies for maximum financing with 3.5% down, 500 – 579 with 10% down. The VA publishes no minimum at all, USDA treats 640 as the line above which your credit passes without extra scrutiny, and jumbo lenders generally start near 700 – 740.

The bigger point is what a score does after approval: it prices the loan, in 20-point bands from below 640 up to 780 and above. Learn each program’s benchmark, which score your lender pulls, what the bands cost, and how to move your number. Our mortgage basics guide covers the vocabulary first.

Key takeaways:

620 is still the practical floor: It’s the conventional minimum on manually underwritten files, 640 on adjustable-rate mortgages, and where most lender overlays sit.
FHA is the low-score path: 580 qualifies for the standard 3.5% down loan, and 500 – 579 qualifies at 90% loan-to-value, meaning 10% down. Below 500 there’s no FHA financing.
Your score prices the loan, not just the approval: On Freddie Mac’s purchase grid, a buyer putting 5% down carries a base credit fee of 0.125% at 780 and above versus 1.750% below 640.

What is a credit score, and how is one built?

A credit score is a three-digit number, usually on a 300 – 850 FICO scale, that predicts how likely you are to fall seriously behind on a debt. It decides which programs you qualify for, then what they cost. It’s the opening move in credit and qualifying, and the one input you can still change. Five unequal categories build it, per myFICO’s breakdown of what goes into your score:

Payment history, 35%: Whether you paid past accounts on time. One 30-day late does more damage than almost anything else.
Amounts owed, 30%: How much available credit you’re using. Revolving balances make this the fastest lever.
Length of credit history, 15%: Closing your oldest card to tidy up works against you.
Credit mix, 10%: The blend of cards, retail accounts, installment loans and mortgages.
New credit, 10%: Whether you’ve opened several accounts in a short window.

Some thresholds matter more than others, because the agencies buying these loans draw hard lines at specific scores.

Score range	Where it puts you	What it means for a mortgage
780 – 850	Best pricing	Best band on Freddie Mac’s purchase grid; above 780 adds nothing.
740 – 779	Strong	Two bands below the top; fees step up at 760 and 740.
700 – 739	Solid	Clear of every program benchmark; typical jumbo starting territory.
660 – 699	Workable	Above the conventional and USDA thresholds; pricing worsens each band down.
620 – 659	At the line	620 is the manual conventional minimum; USDA’s clean review needs 640.
580 – 619	FHA territory	FHA maximum financing with 3.5% down begins at 580.
500 – 579	Limited	FHA only, capped at 90% loan-to-value: 10% down.
Below 500	Ineligible	No FHA financing. See buying a home with bad credit.

What’s a good credit score to buy a house, by loan type?

There’s no single answer: each program sets its own benchmark, and all sit at or below 700.

Loan type	Score benchmark	Minimum down payment	What the rule actually says
Conventional	620	3%	No minimum in automated underwriting since November 2025; 620 fixed and 640 ARM apply to manual files.
FHA	580	3.5%	580 and above is eligible for maximum financing.
FHA, lower tier	500 – 579	10%	Same program, capped at 90% LTV; below 500 is ineligible.
VA	None published	0%	The VA does not use credit scoring; lenders set their own limits, usually 620.
USDA	640	0%	640 and above meets the credit reputation standard; below 640 needs a detailed manual review.
Jumbo	700 – 740	10% – 20%	Above the 2026 conforming limit of $832,750, so each investor writes its own.

Conventional changed in a way most articles haven’t caught up to. Fannie Mae’s Selling Guide now states that a minimum credit score is not required for Desktop Underwriter loan casefiles. The 620 didn’t vanish; it moved into the manual lane, where the Eligibility Matrix still sets 620 for fixed-rate loans and 640 for ARMs. Most lenders in Align’s network still hold a 620 overlay, so a 605 borrower hears “no” from plenty and “let’s look” from a few.

FHA is the most forgiving program by rule.¹ HUD’s handbook is unusually direct: a minimum decision credit score at or above 580 is eligible for maximum financing, 500 to 579 is limited to 90% loan-to-value, and a borrower is not eligible below 500. Borrowers with no score can still get maximum financing when the file is manually underwritten with documented nontraditional credit. The trade-off is insurance: at 3.5% down your loan-to-value exceeds 90%, so FHA annual mortgage insurance runs for the full mortgage term instead of ending after 11 years. Our guide to buying a home with bad credit weighs that against waiting.

VA has no score requirement, which isn’t the same as no credit review.² The VA lender handbook tells underwriters to review each veteran’s credit individually rather than lean on a score, and says a lack of credit is not a negative factor. Lender policy fills the gap: one lender’s 640 overlay is another’s 580.

USDA’s 640 is a review threshold, not a cutoff. Its handbook says applicants at 640 or greater meet the minimum credit reputation requirement absent indicators of unacceptable credit. Below 640, the lender must review the whole credit history in detail, allowed, but it takes documentation and a willing underwriter. For the wider picture, read how your credit impacts buying a house.

Why is your mortgage score different from the one in your app?

Because it’s a different model. Mortgage lenders order a three-bureau merged report and pull older classic FICO versions: Equifax Beacon 5.0, the Experian/Fair Isaac Risk Model V2, and TransUnion FICO Risk Score Classic 04. Those are the versions Fannie Mae’s Selling Guide requires, and they routinely land somewhere other than the free score you’ve watched. From those three the lender picks one, mechanically:

One borrower, three scores: The middle score governs; the high and low are ignored.
One borrower, two scores: The lower is used, not the average.
Two or more borrowers: Each borrower’s score is set first, then the lowest governs. A 780 co-borrower does not rescue a 610 borrower.
No score on file: On Freddie Mac’s purchase grid, a loan with no Indicator Score is priced as if it were below 640, the most expensive band.
FHA uses the same logic: Its minimum decision credit score is the median of three, the lower of two, and the lowest across borrowers.

One reassurance: shopping several lenders will not shred your credit. The CFPB is clear that multiple mortgage credit checks inside a 45-day window count as a single inquiry, because lenders know you’re buying one house. Checking your own report doesn’t affect scores at all. That’s much of why mortgage preapproval matters, and see prequalified vs. preapproved for where that pull lands.

Why does your credit score matter after you’re approved?

Because it sets the price. Freddie Mac’s purchase credit fee grid maps score bands against loan-to-value, and on the version effective July 1, 2026, the bands step every 20 points from 780 and above down through below 640. Those fees are charged to the lender at delivery and passed through to you, usually as a slightly higher rate rather than cash at the table. Here’s the spread on a $300,000 loan with 5% down.³

780 or higher: A base credit fee of 0.125%, or $375.
700 – 719: 0.875%, or $2,625, $2,250 more than the top band for the same house and down payment.
Below 640: 1.750%, or $5,250, which is $4,875 above the top band.

Put 20% down and the spread widens rather than closes: 0.375% at 780 and above against 2.750% below 640. Translated into rate, a 0.25% difference on a $300,000 30-year loan runs roughly $45 – $50 a month and $16,000 – $18,000 in total interest, depending on where rates sit when you lock. Current averages publish weekly in the Freddie Mac Primary Mortgage Market Survey.

Two effects compound that. Private mortgage insurance on a conventional loan is typically priced by credit score and loan-to-value together, so a higher score usually buys a lower premium on top of the lower rate. It also buys room elsewhere: underwriting tolerates more debt or thinner reserves from a 760 borrower than a 620 borrower earning the same.

What else do lenders look at besides your credit score?

Your score is one of four or five inputs, and not automatically the binding one. Plenty of 780 borrowers are declined for reasons outside their credit.

Debt-to-income ratio: Monthly debt payments divided by gross monthly income. There’s no universal cap, as the CFPB on debt-to-income ratio puts it, different loan products and lenders set different DTI limits. On conventional loans the ceiling falls out of the automated underwriting decision. FHA is more explicit: manual files at 500 – 579 or with no score can’t exceed 31/43 qualifying ratios, while 580-and-above files reach 40/50 with two documented compensating factors.
Employment and income stability: Underwriters want a documented two-year pattern. A job change inside the same field reads fine; jumping to self-employment before applying does not.
Down payment and reserves: More down lowers your loan-to-value, moving you left across the pricing grid. Cash left after closing is a compensating factor on its own.
What’s inside the credit history: Collections, charge-offs, a recent bankruptcy or foreclosure and their seasoning periods are judged separately from the number.

How can you raise your credit score before applying?

Utilization changes report within one to two billing cycles, often enough to cross a 20-point band. Start six to twelve months out if you can; even 60 days pays.

Pay down revolving balances first: Amounts owed is 30% of the score and updates fastest. Target utilization under 30% per card, ideally under 10%, and pay before the statement cuts.
Dispute reporting errors: Pull all three at your free official credit reports and check balances, statuses and identity details. Disputing is free; never pay a repair company. Our credit repair strategies cover the sequence.
Leave old accounts open: Length of history is 15%; closing a paid-off 12-year-old card shortens history and shrinks available credit at once.
Open nothing new: Not a card, not a furniture plan, not a car. Lenders re-pull credit before closing, and a new auto loan can reprice or sink the file.
Keep every payment on time: Payment history is 35%; one 30-day late during escrow can cost a full pricing band.

Honesty beats optimism: waiting is sometimes the wrong call. At 615 with stable income in a rising market, buying now at FHA pricing and refinancing later can beat sitting out a year to reach 660. That’s a math question, and a preapproval tells you which way it falls.

What Michigan buyers should know

Michigan’s largest first-time buyer program draws its own credit line, above both the conventional and FHA floors. If down payment assistance is part of your plan, 640 is the number that matters.

MSHDA’s MI Home Loan requires a minimum credit score of 640: The Michigan State Housing Development Authority sets this on top of whatever the underlying FHA, RD or conventional loan requires. A 600 score can get an FHA loan in Michigan; not an MI Home Loan.
The MI 10K DPA Loan is up to $10,000, statewide and interest-free: It covers down payment, closing costs and prepaid taxes and insurance, and pairs with FHA, RD and conventional first mortgages, often the gap-closer for a buyer at 640 – 660 with thin savings.
The MI Home Loan sales price limit is $566,355 statewide after June 1, 2026: It’s open to first-time buyers statewide, no home ownership in the previous three years, and repeat buyers in targeted areas. Income limits vary by family size and county.
A housing education class is required: MSHDA maintains a locator for approved classes, and the loan can’t close without the certificate.

Because Align Lending is a broker rather than a bank, we place MSHDA, FHA, VA, USDA and conventional financing through partner lenders, so the 640 question and the 580 question get answered in one conversation. More sits in credit and qualifying.

How Align helps when credit is the question

Another lender's no is not always the final answer. Lenders add their own rules on top of the program's, and Samantha can take your file to a wholesale lender whose rules fit it.

If it is not time yet, she will say so and tell you what to work on first. It is also why local real estate agents bring her in for second opinions.

Take a mortgage readiness review

FAQ: Credit scores to buy a house

Here are answers to common questions about credit scores to buy a house.

Can I buy a house with a 580 credit score?

Yes, most commonly through an FHA loan, which allows 3.5% down at a 580 score. Lenders can impose overlays requiring more, so one lender’s denial is not the market’s answer. Expect higher pricing and mortgage insurance for the full loan term. Our guide to buying a home with bad credit walks both paths.

Which credit score do mortgage lenders actually use?

All three bureaus, scored with older classic FICO versions rather than the model behind a free consumer app. With one borrower they use the middle of the three; with two borrowers, the lower of the two middle scores. That’s why your app often isn’t showing what your loan officer sees, see prequalified vs. preapproved.

How much does a higher credit score actually save?

Pricing tiers step at 20-point intervals, so moving from 680 to 700 or 740 to 760 can measurably lower your rate. On a $300,000 30-year loan, a 0.25% difference is worth roughly $45 to $50 a month and about $16,000 to $18,000 over the full term, plus a possible cut to your mortgage insurance premium. See how credit impacts buying a house.

How fast can I raise my credit score before applying?

Paying down revolving balances is the fastest lever, and it can post within one to two billing cycles. Keep utilization under 30% and ideally under 10%, don’t close old accounts, and dispute errors using your free reports. Avoid new accounts and large purchases. An auto loan can undo months of progress days before closing. Our credit repair strategies for home buyers lay out a 90-day sequence.

The bottom line on credit scores to buy a house

620 is the practical floor for most mortgages, but softer than it was: automated conventional underwriting dropped its hard 620 cutoff in November 2025, while 620 fixed-rate and 640 ARM still govern manual files and most lender overlays. FHA remains the low-score path at 580 with 3.5% down, or 500 – 579 with 10% down. VA publishes no minimum, USDA uses 640, and MSHDA requires 640. Above the floor the score stops being a gate and becomes a price: 0.125% at 780 and above against 1.750% below 640 on a 5%-down purchase.

If you’re ready to find out what your score qualifies for, talk to Align Lending. We’ll shop your scenario across our lender network and show you which lenders’ guidelines fit your number, side by side. Call 248-506-5727 or start online today.

Footnotes:

1. Align Lending is not acting on behalf of or at the direction of FHA or HUD. FHA credit score, loan-to-value and mortgage insurance requirements are set by HUD in Single Family Housing Policy Handbook 4000.1 and are subject to change. Lenders in Align’s network may apply overlays stricter than FHA’s published minimums. Return to text.

2. Align Lending works with VA-approved lenders and is not endorsed or sponsored by the Dept. of Veterans Affairs or any government agency. VA eligibility and entitlement are determined by the VA; credit standards on VA loans are set by individual lenders. Return to text.

3. Example figures in this article are hypothetical and for educational purposes only; they do not constitute an advertisement of credit terms or a rate quote under federal or state lending laws. Credit fees shown are published base grid amounts charged to the lender at delivery and are not necessarily itemized as a fee to you. Your rate, fees and terms will depend on your application, your loan program and market conditions, and will be disclosed on your Loan Estimate. Return to text.

Sources: no minimum credit score for Desktop Underwriter loan casefiles, required classic FICO score versions (Equifax Beacon 5.0, Experian/Fair Isaac Risk Model V2, TransUnion FICO Risk Score Classic 04) ordered as a three-in-file merged credit report, and minimum credit scores of 620 for fixed-rate loans and 640 for ARMs on manually underwritten loans per the Eligibility Matrix, Fannie Mae Selling Guide B3-5.1-01. Removal of the 620 minimum representative credit score and average median credit score for loan casefiles created on or after November 16, 2025, Fannie Mae Selling Guide Announcement SEL-2025-09. Representative credit score selection (middle of three scores, lower of two scores, lowest applicable score across multiple borrowers) Fannie Mae Selling Guide B3-5.1-02. Purchase base grid Indicator Score bands (780 and above through below 640), credit fees of 0.125% and 1.750% above 95% LTV, 0.375% and 2.750% at 75.01% – 80% LTV, and pricing of mortgages without an Indicator Score at the below-640 grid, Freddie Mac Single-Family Seller/Servicer Guide Exhibit 19, Bulletin 2026-09, effective 07/01/2026. Minimum decision credit score definition, the 580 maximum-financing threshold, the 500 – 579 limit of 90% LTV, ineligibility below 500, maximum financing for borrowers with nontraditional or insufficient credit under manual underwriting, manual qualifying ratios of 31/43 and 40/50, and annual mortgage insurance premium duration of the mortgage term above 90% LTV versus 11 years at or below 90% LTV, HUD Handbook 4000.1 and Appendix 1.0. No VA minimum credit score, individual review of each veteran’s credit, and lack of credit not treated as a negative factor, VA Lenders Handbook, VA Pamphlet 26-7, Chapter 4. Applicants with credit scores of 640 or greater meeting the minimum credit reputation requirement, and the detailed credit review required below 640, USDA Single Family Housing Guaranteed Loan Program Handbook HB-1-3555, Chapter 10. FICO score category weights of 35%, 30%, 15%, 10% and 10%, myFICO. Multiple mortgage credit checks within a 45-day window counting as a single inquiry, and self-checks not affecting scores, Consumer Financial Protection Bureau. Removal of the 43% debt-to-income limit from the General QM definition and its replacement with price-based thresholds, mandatory compliance October 1, 2022, CFPB General QM Final Rule; “different loan products and lenders will have different DTI limits,” CFPB. 2026 baseline conforming loan limit of $832,750 for one-unit properties, Federal Housing Finance Agency. MI Home Loan minimum credit score of 640, sales price limit of $566,355 statewide after June 1, 2026, first-time buyer definition, income limits and required housing education class; MI 10K DPA Loan of up to $10,000 statewide as an interest-free loan usable for down payment, closing costs and prepaids on FHA, RD and conventional loans, Michigan State Housing Development Authority (michigan.gov/mshda).

Student loan balances affect the credit profile and the debt-to-income calculation in different ways, and the repayment plan you are on changes the payment an underwriter uses. Read more on buying a home with student loan debt.

This article is for informational purposes only and is not intended to provide legal, financial, or tax advice. Credit score requirements, agency guidelines, credit fees, mortgage insurance rates and program rules change and vary by lender, program and property; confirm your figures with your Loan Estimate and consult a qualified professional about your situation. Figures shown are illustrative, are not a rate quote or an offer of credit, and are subject to change. Align Lending is an independent Michigan mortgage broker, NMLS #2041154.