Minimum Credit Scores by Loan Type
- Conventional loans: 620 minimum (some lenders require 640-680)
- FHA loans: 500 with 10% down payment, 580 with 3.5% down
- VA loans: No official minimum, but most lenders require 620+
- USDA loans: 640 typically required
- Jumbo loans: Usually 700-720 minimum
How Credit Score Affects Your Rate
Your credit score directly impacts your mortgage interest rate. Even a small rate difference adds up significantly over 30 years:
| Credit Score | Approximate Rate | Monthly Payment ($300K) | Total Interest Paid |
|---|---|---|---|
| 760+ | 6.5% | $1,896 | $382,633 |
| 700-759 | 6.75% | $1,946 | $400,457 |
| 680-699 | 7.0% | $1,996 | $418,527 |
| 660-679 | 7.25% | $2,046 | $436,842 |
| 620-659 | 7.75% | $2,148 | $473,214 |
Rates are illustrative; actual rates vary by lender and market conditions.
The difference between a 760 score and a 620 score could cost you over $90,000 in additional interest over the life of the loan.
What If Your Score Is Below 620?
- Consider FHA loans: More forgiving credit requirements (580+ for 3.5% down)
- Work on improving your score: Even a few months of improvement can help. Pay down credit cards, make on-time payments, dispute errors
- Look at non-QM lenders: Some specialize in lower credit scores but charge higher rates
- Add a co-borrower: A co-signer with better credit can help you qualify
If your score is close to a threshold (like 739 vs 740), wait and improve it before applying. A few months of credit improvement can save you thousands over the loan term. Pay down credit card balances below 10% utilization for the quickest score boost.
Beyond Credit Score: Other Factors
Lenders also consider:
- Debt-to-income ratio (DTI): Most lenders want below 43%
- Down payment size: Larger down payments offset lower scores
- Employment history: Typically 2 years of steady employment
- Savings and reserves: Having extra savings helps your application
The Bottom Line
You can get a mortgage with a score as low as 500 (FHA), but you'll pay significantly higher rates. Aim for 620+ for conventional loans and 740+ for the best rates. If your score is below these thresholds, consider waiting a few months to improve it—the long-term savings are substantial.