What Credit Score Do You Need To Buy a House in 2021?

what credit score do you need to buy a house

In 2020, home sales soared to 5.64 million units and could have climbed higher had there been more inventory. For some, it felt like everyone around them either excitedly entered into the home buying process or grappled with the financial hardship as a result of pandemic shutdowns. 

If you find yourself looking to find your forever home, you might think that you need perfect credit to qualify for a mortgage. That couldn’t be further from the truth. So, what credit score do you need to buy a house? The required credit score for a mortgage is largely dependent on the type of mortgage you’re applying for. 

Keep reading to find out credit score requirements for each type of loan and how to prepare your credit score and finances for homeownership. 

Do you need good credit to buy a home?

The term “good” in regards to credit score is subjective depending on which credit scoring models the mortgage lender uses and this number can vary. Each situation is looked at individually but it is possible to buy a home with a subpar credit score or a past bankruptcy.  

Below are the types of loans you can get based on different credit score ranges, from lowest to highest. Keep in mind, these credit score ranges can change based on lenders.

Credit Score: 500-580

FHA Loan

These types of loans are backed by the Federal Housing Administration and could be a good fit for someone who has poor credit and doesn’t have much towards a down payment. Albeit, you’ll be required to pay monthly mortgage insurance. Typically, someone with a 500 credit score would be required to put down 10%. While someone with a 580 credit score might only be required to put down 3.5%.

Credit Score: 580-660

VA Loan

Government-backed VA loans are insured by The U.S. Department of Veterans Affairs. These types of loans do not require a specific credit score, but private VA loan lenders typically have a minimum of between 580-660 credit score. 

Additionally, either you or your spouse must meet the basic Department of Veteran Service Affairs (VA) requirements including a valid Certificate of Eligibility (COE) and lender credit and income requirements. Also, at least one of the following service history and duties:

  • Served 90 consecutive days of active service during wartime
  • Served 181 days of active service during peacetime
  • 6 years of service in the National Guard or Reserves
  • Spouse of a veteran service member who has died in the line of duty, missing in action, or being held as a prisoner of war. 

Visit VA.gov to find out more

Credit Score: 620+

Conventional Loan

Different loans can fall into the conventional loan category, such as jumbo loans, but generally, these loans have stricter qualifying terms than FHA loans. However, conventional loans are not guaranteed or insured by the federal government. Every lender has their own credit score criteria but some lenders will allow a score of 620 and a debt-to-income ratio of 50% or less to qualify for a conventional loan.  

Credit Score: 640+


The U.S. Department of Agriculture backs USDA loans and lenders can offer lower interest rates compared to conventional because of their government backing. These loans are known for making rural home-buying more affordable with little to no down payment, competitive interest rates, and low monthly payments. Lenders may have their own set of guidelines, in addition to the USDA’s Rural Development Program requirements below:

  • U.S. citizen or legal permanent resident
  • Creditworthiness (repayment history, credit utilization, length of credit history)
  • At least 640 credit score
  • Stable income
  • Credit history of at least 12 months of no late payments or collections
  • Household income equal to or less than 115% of the area median income
  • Property is the primary residence 
  • Located in qualified rural areas

Will I save money on my mortgage if I have a better credit score?

Yes, having a higher score can get you better interest rates, terms and possibly reduce the down payment amount. However, as we’ve explained you can still qualify for a mortgage under the right circumstances with a low credit score.  

How can I renew my score to get a better mortgage rate?

If home buying is on the horizon, a Credit Builder Loan from MoneyLion can help get your credit score in tip-top shape. Over the course of 12 months we’ll report your payments to all three credit bureaus and potentially enrich your credit up to 60 points in 60 days! 

Keep close tabs on your credit progress in our mobile app and have access to 0% APR cash advances at your fingertips–just in case!  Here are some other must-do tips to enhance your credit score:

  • Create a budget: Not sure where you’re spending your money? Skip the old school budget sheets and sign up for a MoneyLion RoarMoney account to track your spending by category. 
  • Make on-time payments: Set up auto-pay and due date alerts on your bills to avoid missed payments. After all, a missed payment can knock your credit score down by up to 100 points! 
  • Micropayments: Split your monthly payments into micropayments. This decreases interest and gets you ahead of your repayment timeline.
  • Track credit progress: As we said before, MoneyLion Credit Builder plus members get 24/7 credit monitoring access alongside tools like the Financial Heartbeat to keep your financial health on point. 
  • Authorized user: As a trusted family member or friend to hop on their credit card as an authorized user. PSA: make sure they have excellent credit and always make their payments on time!

Prepare Your Credit For Homeownership 

A good rule of thumb is not to spend more than 29% of your gross income on your monthly mortgage payments. So, before you get a mortgage prequalification, sit down and review your finances to determine how much you can afford. This will help you avoid the heartbreak of falling in love with a house that you cannot afford. 

During the home buying, process fees can add up at a moment’s notice and payday stays the same. For last-minute cash needs, consider using Instacash and instantly get up to $250 interest-free!

Sign Up
Sign Up

Build your credit and save

Join Credit Builder Plus to get a loan up to $1,000, credit monitoring, exclusive rewards, access to 0% APR cash advances, and more. Over half of members raise their credit over 60 points within 60 days!

Sign Up