The minimum credit score you need to buy a house could range from around 500 to 700, but will ultimately depend on the type of mortgage loan you're applying for and your lender. Many lenders require a minimum credit score of 620 for a conventional mortgage.
You can buy a $300,000 house with only $9,000 down when using a conventional mortgage, which is the lowest down payment permitted, unless you qualify for a zero-down-payment VA or USDA loan. Different lenders have different rules, but typically they require a 620 credit score for conventional loan approval.
For most people, increasing a credit score by 100 points in a month isn't going to happen. But if you pay your bills on time, eliminate your consumer debt, don't run large balances on your cards and maintain a mix of both consumer and secured borrowing, an increase in your credit could happen within months.
The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).
What is the highest credit score possible? To start off: No, it's not possible to have a 900 credit score in the United States. In some countries that use other models, like Canada, people could have a score of 900. The current scoring models in the U.S. have a maximum of 850.
A good credit score to buy a home is one that helps you secure the best mortgage rate and loan conditions for the mortgage you're applying for. You'll typically need a credit score of 620 to finance a home purchase.
Your score falls within the range of scores, from 580 to 669, considered Fair. A 628 FICO® Score is below the average credit score.
To put it into perspective, as of November 2022, the typical borrower with prime credit (720 or higher FICO score) got an APR of 5.34% on a 60-month new auto loan. With a score in the 620-659 credit score range, the average APR was 11.76%. And with a score of 590-619, the average rate was 15.92%.
Per FHA eligibility requirements, the lowest possible credit score that qualifies for an FHA loan is 500. This is typically lower than conventional loan credit requirements. However, loans issued to borrowers with scores below 580 are considered “subprime” and represent a higher risk to lenders.
A FICO score of 620 or better is typically required for a conventional loan and, if your score is 760 or higher, you should qualify for the best interest rates.
Even better, just over 1 in 5 people (21.2%) have an exceptional FICO credit score of 800 or above, all but guaranteeing access to the best products and interest rates.
And when it comes to credit, 850 is the highest the FICO® Score☉ scale goes. For more and more U.S. consumers, practice is making perfect. According to recent Experian data, 1.54% of consumers have a "perfect" FICO® Score of 850. That's up from 1.31% two years earlier.
I make $25K a year; can I buy a house? Yes, if you make $25K a year, you can likely afford around $580 per month for a monthly mortgage payment. With a 6% fixed rate and a 3% down payment, this could buy you a house worth about $100,000. However, consult a mortgage lender for exact numbers tailored to your situation.
To purchase a $200,000 house, you need a down payment of at least $40,000 (20% of the home price) to avoid PMI on a conventional mortgage. If you're a first-time home buyer, you could save a smaller down payment of $10,000–20,000 (5–10%). But remember, that will drive up your monthly payment with PMI fees.
With a $40,000 annual salary, you could potentially afford a house priced between $100,000 to $140,000, depending on your financial situation, credit score, and current market conditions.
You'll usually need a credit score of at least 640 for the zero-down USDA loan program. VA loans with no money down usually require a minimum credit score of 580 to 620. Low-down-payment mortgages, including conforming loans and FHA loans, also require FICO scores of 580 to 620.
Overall, Credit Karma may produce a different result than one or more of the three major credit bureaus directly. The slight differences in calculations between FICO and VantageScore can lead to significant variances in credit scores, making Credit Karma less accurate than most may appreciate.
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