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Your credit score can have an impact not only on your ability to get a mortgage, but also on the loan’s rate and terms. Mortgage lenders consider your score, alongside other factors like employment, income and debt, to determine whether you can realistically afford the home you want. While some mortgage programs open the door for those with lower credit scores, a higher score means you won’t be burdened with higher costs, so the better your score, the cheaper your mortgage overall. Mortgage and credit score statistics
Credit score to buy a houseSome types of mortgages have specific minimum credit score requirements. A conventional loan requires a credit score of at least 620, but it’s ideal to have a score of 740 or above, which could allow you to make a lower down payment, get a more attractive interest rate and save on private mortgage insurance. An FHA loan can be had with a credit score as low as 580 or 500, depending on down payment amount. That said, taking out an FHA loan with a very low credit score can still be a challenge, since lenders can impose their own higher credit minimums. The U.S. Department of Veterans Affairs (VA) doesn’t set credit minimums for VA loans, but many VA lenders have their own credit requirements, typically in the low- to mid-600s. Similarly, USDA loans don’t have a credit score requirement by U.S. Department of Agriculture standards, but you should still be prepared to meet the minimum set by lenders, usually 640.
Average credit score by stateThe credit health of Americans varies across states. Minnesota has the highest average credit score, 724, followed by New Hampshire (720) and Vermont (719), according to VantageScore data from December 2021. Mississippi (660), Louisiana (668) and Alabama (670) have the lowest average scores. The Northeast and Pacific Northwest tend to have higher credit scores overall, while the Deep South has some of the lowest scores. Average mortgage debt by age groupAmericans typically begin borrowing in young adulthood as they face major expenses like housing and education at a lower income level. They tend to borrow at a slower pace in middle age as incomes rise. As they age, Americans start deleveraging as they pay off their loans.
Credit scores and mortgage ratesGenerally, the higher your credit score, the lower your mortgage rate and less you’ll pay on a monthly basis and in interest overall. Depending on your credit, a 30-year fixed-rate mortgage for $286,400 could cost you:
What else do mortgage lenders consider?Along with credit history and score, mortgage lenders take into account your:
Bottom lineA mortgage is one of the biggest financial commitments you’ll ever make, and will follow you for years to come — even older borrowers still typically shoulder six-figure debt. In preparation for your finances to be scrutinized, it’s crucial to improve or maintain your credit score so you get the best possible mortgage rate and terms. Learn more:
What is a ok credit score to buy a house?Conventional Loan Requirements
It's recommended you have a credit score of 620 or higher when you apply for a conventional loan. If your score is below 620, lenders either won't be able to approve your loan or may be required to offer you a higher interest rate, which can result in higher monthly payments.
What credit score do you need to have to get a home loan?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 average credit score for a house?Though you may be able to get a conventional loan with a credit score as low as 620, these mortgages often require higher scores. Average credit score for conventional loan: The average FICO score for home buyers using conventional loans is 749, according to the most recent data available from ICE Mortgage Technology.
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