Last Updated on June 24, 2022 by Luke Feldbrugge
When you are a first time home buyer or want to refinance for the first time, you may ask yourself what’s a good credit score to buy a house, or what is the minimum credit score to refinance? To get approved for a mortgage when buying a house or refinancing, your lender will look at how you use credit and manage debt to determine if you are financially responsible. This is important because the type of loan and interest rate you receive for your mortgage loan depends largely on your credit score and your credit history report. Here is some information about credit scores to help you answer those questions, as well as some credit repair tips to keep your financial health strong.
What is a Good Credit Score to Buy a House?
In general, a good credit score to buy a house (minimum to qualify) is 620 or higher. If you have a credit score of at least 620, you qualify for nearly all of the most common mortgage loan types, however, if you do not have a good credit score you may want to search into ‘how to build my credit score’ so you are able to eventually buy your house.
This is why those looking to buy a house really need to know their credit score. It’s also important to learn how the minimum qualifications differ for each loan type. Here are the typical minimum credit scores for each type of mortgage loan:
- Conventional Loan: 620 or higher
- FHA 203K Loan: 620 or higher
- VA Loan: 620 or higher (some lenders will allow 580 or higher)
- USDA Loan: 640 or higher
- FHA Loan: 580 or higher (scores of 500-579 are possible but unlikely)
It’s important to note the credit standards listed above are generally considered the minimum for securing a home loan. The better your credit score, the better interest rate you will receive on your mortgage, saving you money in the long run. Here is the general impact of credit scores on mortgage interest rates:
But lenders don’t make decisions based on your credit score alone. In reviewing your mortgage application, they’ll also consider your income, debt, assets, employment and your ability to pay a down payment. Again, mortgage lenders are looking at the big picture, so it’s never about just one factor.
If you’re not sure you have the credit score needed to buy a house or have questions about what lenders are looking for, Homes for Heroes can help. When you register with Homes for Heroes online, you’ll be automatically matched with a real estate and mortgage specialist in your area. Our mortgage specialists are experts in helping people make sense of their financial history and can work with you to find the loan option that’s right for you. Our specialists can be your dedicated team of professionals throughout the home buying or refinancing process. On average, heroes who have purchased a home using Homes for Heroes specialists have saved over $2,400.
What Is a Good Credit Score to Refinance a Mortgage?
Many people choose to refinance their homes to take advantage of lower interest rates and hopefully secure lower monthly payments. Right now, interest rates are lower than they’ve been in years. Because refinancing ultimately means getting a new mortgage, you’ll need to complete many of the same steps you did when getting your first mortgage. However, the requirements for credit to refinance is a bit different. Here are the generally accepted minimum credit scores needed to refinance a mortgage:
- FHA Loan: 620 or higher
- Conventional Loan: 620 or higher
- Home Equity Loan: 680 or higher
- Cash-Out Refinance: 640 or higher
- FHA 203k Loan: 680 or higher
Although these minimum requirements are fairly standard across the industry, your individual lender may have different standards. Also, your credit score alone won’t be the only factor the lender considers when reviewing your refinancing application. They will also look at the equity you’ve built in the home, the loan-to-value ratio (LTV), your debt-to-income ratio (DTI) and more.
As with buying a house, there’s no one perfect credit score to refinance. Instead, lenders will consider your entire financial profile. If you’ve paid off much of your original mortgage, you might not need as high of a score. If you have a high DTI, you might need a higher score. With so many factors in play, the best thing to do is consult a mortgage specialist who can put the information together. They will give you insight on your unique situation and how to put yourself in the best position to refinance.
Top 5 Credit Repair Tips
The truth is, unless you have a perfect credit score of 850, everyone can use these credit repair tips. Unfortunately, there’s no magic wand you can wave and instantly improve your credit score. But some of these credit repair tips are simple steps you can take to repair your credit over time. Some have almost an immediate impact, while others may take years to significantly raise your score. The important thing is all of these credit repair tips will help you build the type of credit history mortgage lenders like to see. Here are the top five credit repair tips:
- Remove any errors or inaccuracies from your credit history report. Get your report: AnnualCreditReport.com
- Pay all of your bills on time (early is better)
- Keep your credit card debt under 30 percent of your available credit limit
- Only open a new line of credit if you intend to use it over the long-term
- Don’t close existing lines of credit, even if you don’t use them
Recommended Credit Repair Service
If your credit score is 580 or less, we want to help you raise it. Your credit scores range is used in qualifying for many things, not just getting a mortgage and buying a home. To assist in repairing your credit, we recommend using a Homes for Heroes credit repair service specialist who offer our heroes Local Deals. Check your state to see what specialists are available to you.
Again, your credit score is only one piece of the home loan pie. But, it’s a big piece. Hopefully this article helped you understand what’s a good credit score to buy a house or refinance, and if needed, provided some credit repair tips and resources to improve your score.
Now that you know everything about your credit score to buy a house, are you ready to begin the home buying process? Register with Homes for Heroes and our mortgage and real estate specialists will answer your questions and save you money on your next home purchase or new mortgage.
4 thoughts on “What Is a Good Credit Score to Buy a House or Refinance?”
Which of the 3 credit bureaus scores do you use in determining if a buyer qualifies?
Experian, Transunion or Equifax?
Great question, Steven! Each individual lender has their own requirements and criteria they use to determine qualifying eligibility. Some use a specific credit bureau while some take a look at all three. If you sign up for Homes for Heroes, we’ll connect you with a lender, and you can ask them all the questions you have, including this one!
I am interested in selling my current home and buying another that’s more suited for my disibility
Hi Sandra, thank you for reaching out. Please register here and we will automatically connect you with our real estate/mortgage specialist in your area to get the process started.