Most lenders want a credit score of 620 or higher, but 740 and above gets you better rates

The minimum credit score to get a mortgage is usually 620, but that does not mean it is a good idea to borrow at that level. A score of 620 puts you in the subprime category — lenders will approve you, but they charge higher interest rates to offset the risk. A score of 740 or above typically unlocks the best rates available that month. The difference between a 620 score and a 760 score can cost you tens of thousands of dollars over the life of a 30-year loan.

What counts as "good" depends on the type of mortgage. Conventional loans (the most common kind, not backed by the government) usually require 620 minimum. FHA loans, which are insured by the Federal Housing Administration, sometimes go as low as 580. VA loans for military members and USDA loans for rural properties have their own rules, but generally accept lower scores than conventional loans do. The catch is that lower scores mean higher interest rates across all loan types.

Key Takeaways

  • A credit score of 620 is the minimum most lenders will accept for a conventional mortgage, but scores below 740 come with higher interest rates.
  • FHA loans may accept scores as low as 580, but you will pay more in interest and mortgage insurance premiums than borrowers with higher scores.
  • The difference between a 620 score and a 760 score can add $100,000 or more to the total cost of a 30-year mortgage.
  • Lenders look at your full financial picture — income, debt, savings, and employment history — not just your credit score.
  • Improving your score before you apply, even by 50 points, can lower your interest rate and save you money each month.

How interest rates change with your credit score

Lenders price mortgages based on risk. A borrower with a 760 score has a proven track record of paying bills on time; a borrower with a 620 score has missed payments or carried high debt. To compensate for that risk, lenders charge the lower-score borrower a higher interest rate.

The exact rate difference varies by lender, by the current market, and by the type of loan. As a rough example, a borrower with a 760 score might be offered 6.5% interest, while a borrower with a 620 score might be offered 7.8% on the same day, for the same loan amount. Over 30 years on a $300,000 mortgage, that 1.3% difference means paying roughly $150,000 more in interest alone.

FHA loans add another cost: mortgage insurance. If you put down less than 20% and your score is below 640, you pay a higher mortgage insurance premium. That premium is built into your monthly payment and lasts for the life of the loan (or until you refinance). Conventional loans also require mortgage insurance below 20% down, but the rates are usually lower than FHA insurance.

Credit score requirements by loan type

Conventional loans are mortgages sold to investors like Fannie Mae or Freddie Mac. Most require a minimum score of 620, though some lenders go as low as 580 with a larger down payment. Scores of 740 and above get the best rates. You typically need to put down at least 3% to 5%, and you will pay mortgage insurance if you put down less than 20%.

FHA loans are insured by the federal government, which means lenders take on less risk and can accept lower scores. The minimum is usually 580, though some lenders require 600 or 620. The trade-off is that FHA loans charge mortgage insurance premiums that are often higher than conventional insurance. You can put down as little as 3.5%, but your monthly payment will include that insurance cost for the entire loan.

VA loans for military members, veterans, and surviving spouses typically have no official minimum credit score — the Department of Veterans Affairs does not set one. Individual lenders do, and most require 580 to 620. VA loans do not require a down payment or mortgage insurance, which makes them valuable even if your score is lower than conventional lenders prefer.

USDA loans for rural properties also have no official VA-set minimum, but most lenders require 620 or higher. These loans do not require a down payment and do not charge mortgage insurance, though they do charge a may provide fee. Like VA loans, they can be a good option if your score is below what conventional lenders want.

What lenders actually look at beyond your score

Your credit score is one number. Lenders also examine your debt-to-income ratio, your employment history, your savings, and the size of your down payment. A borrower with a 650 score, stable employment for five years, and 20% down may get better terms than a borrower with a 720 score, a job change last month, and 3% down.

Lenders pull your full credit report, not just your score. They want to see what kinds of debt you carry (credit cards, car loans, student loans), how long you have had accounts open, and whether you have missed payments recently. A single late payment from two years ago hurts less than a late payment from two months ago. Collections accounts, foreclosures, and bankruptcies stay on your report for years and make approval harder, even with a decent score.

Your down payment matters. The larger your down payment, the more forgiving lenders are about a lower score. A 15% down payment with a 640 score may be approved when a 3% down payment with the same score is denied. Down payment size also affects whether you pay mortgage insurance and how much that insurance costs.

How to improve your score before applying

If your score is below 700 and you are not buying immediately, spending three to six months improving it can save you money. The fastest way is to lower your credit card balances. Your credit utilization — the percentage of your available credit you are using — makes up about 30% of your score. If you have a $5,000 limit and a $4,500 balance, paying it down to $1,500 can raise your score by 50 points or more.

Do not close old accounts after you pay them down. The length of your credit history matters, and closing accounts lowers your average account age. Keep the accounts open with a zero balance.

Do not apply for new credit in the months before you apply for a mortgage. Each application triggers a hard inquiry, which lowers your score slightly. Multiple inquiries in a short time signal to lenders that you are desperate for credit, which raises their concern about your financial stability.

If you have missed payments, wait. A late payment from seven years ago hurts much less than one from two years ago. If you have a recent late payment, lenders will want to see that you have paid on time since then. Waiting six months to a year after a late payment, while building a clean payment record, is often worth the delay.

When a lower score might still work

If your score is between 580 and 620, you have options. FHA loans are designed for borrowers in this range. VA and USDA loans do not require high scores and do not charge mortgage insurance. Credit unions sometimes have more flexible lending standards than big banks, especially if you have been a member for a while.

Some lenders offer manual underwriting, which means a person reviews your full financial picture instead of relying on automated scoring. If you have a good reason for a lower score — a medical emergency, a job loss you have recovered from, a divorce — manual underwriting can work in your favor. You will need to document the reason and show that your finances have stabilized since then.

If you are not ready to buy now, improving your score by 100 points over the next year can lower your interest rate by 0.5% to 1%, which translates to real savings. If you need to buy soon, a lower score does not disqualify you — it just means higher costs and fewer loan options.

Frequently Asked Questions

Can I get a mortgage with a 600 credit score?

Yes, through an FHA loan or VA loan. Conventional lenders usually require 620 minimum. FHA loans accept 580 and up, though you will pay higher mortgage insurance premiums. VA loans have no official minimum and do not charge mortgage insurance, making them the best option if you may have access to.

How much does a 50-point score increase save me?

A 50-point increase typically lowers your interest rate by 0.25% to 0.5%, depending on the lender and current market rates. On a $300,000 loan, that saves $75 to $150 per month, or $27,000 to $54,000 over 30 years. The exact savings depend on your loan amount and the lender.

Do I need to wait to buy if my score is 650?

Not necessarily. A 650 score qualifies for FHA loans and some conventional loans, especially with a larger down payment. Whether to wait depends on your housing situation and how quickly you can improve your score. If you can raise it to 700 in six months, waiting may save you money. If you need housing now, a 650 score is workable.

Will paying off debt before applying hurt my score?

Paying down credit card balances helps your score. Paying off installment loans (car loans, student loans) may lower your score slightly in the short term because it changes your credit mix, but the benefit of lower debt outweighs this. Do not close accounts after paying them off.

What if my score dropped right before I applied?

Tell your lender what happened. A recent hard inquiry from a mortgage pre-qualification, a new account you opened, or a reported late payment can all lower your score temporarily. If the drop is recent and you have a good explanation, some lenders will work with you. If possible, wait 30 days before formally applying so the inquiry ages slightly.