Credit Score Requirements for Mortgages
What lenders look for, minimum score ranges, and how credit affects your mortgage rate.
Your credit score plays a major role in whether you qualify for a mortgage and how much that loan ultimately costs. Lenders use it to estimate risk, set interest rates, and decide which loan programs are available to you.
Why Credit Scores Matter for Mortgages
A mortgage is a long-term loan, often lasting 15 to 30 years. Because lenders are committing capital for decades, they rely heavily on credit scores to assess the likelihood that a borrower will repay the loan on time.
Your credit score influences three critical outcomes: whether you’re approved, which loan types you can access, and the interest rate you’re offered. Even small differences in score can have a noticeable impact on monthly payments.
Common Mortgage Credit Score Ranges
While exact requirements vary by lender and loan type, mortgage approvals generally fall into broad credit score ranges.
- Excellent (740+): Access to the most competitive rates and loan terms
- Good (700–739): Strong approval odds with favorable pricing
- Fair (640–699): Approval possible, often with higher rates or costs
- Below 640: Limited options, often requiring specialized loan programs
These ranges are guidelines, not guarantees. Lenders also evaluate income, debt, assets, and overall financial stability.
Credit Score Requirements by Loan Type
Different mortgage programs allow different levels of credit flexibility.
Conventional loans
Conventional mortgages typically favor higher credit scores. Borrowers with stronger credit often receive better interest rates and lower mortgage insurance costs.
FHA loans
FHA loans are designed to be more forgiving of past credit challenges. They often allow lower scores, though mortgage insurance costs may be higher over time.
VA and USDA loans
VA and USDA loans can offer flexibility for eligible borrowers, though lenders still look for responsible credit behavior even if there is no official minimum score.
How Credit Scores Affect Interest Rates
Credit score has a direct effect on your mortgage interest rate. Higher scores signal lower risk, allowing lenders to offer better pricing.
On large loan balances, even a small rate difference can translate into thousands of dollars over the life of the loan. That’s why improving a score by even 20–40 points before applying can be financially meaningful.
What Lenders Look at Beyond the Score
A credit score is only one part of the approval decision. Lenders also review the details inside your credit report.
- Payment history and late payments
- Outstanding balances and credit utilization
- Length of credit history
- Recent credit inquiries
- Public records such as bankruptcies or collections
A borrower with a slightly lower score but clean recent history may be viewed more favorably than someone with a higher score but recent delinquencies.
Improving Your Credit Before Applying
If you’re planning to apply for a mortgage, small improvements can make a meaningful difference.
- Pay all bills on time, every time
- Reduce credit card balances where possible
- Avoid opening new credit accounts before applying
- Review your credit reports for errors
Improving credit is often one of the highest-return steps a borrower can take before locking in a mortgage rate.
Comparing payments at different interest rates can help you understand how improving your credit score may lower your monthly cost over time.