If you're thinking about buying a home, there's a good chance you've looked at your credit score and wondered:
“Is my credit score high enough to qualify for a mortgage?”
The answer isn't always as simple as a single number.
Your credit score is important, but it's only one part of the mortgage qualification process. The loan program, your income, existing debts, down payment, credit history, and other factors can all play a role.
And here's something many prospective homebuyers don't realize:
You don't need perfect credit to start talking to a mortgage lender.
In fact, if you're thinking about buying a home, talking to a lender early can be one of the best ways to find out where you actually stand.
What Credit Score Do You Need to Buy a House?
There isn't one universal minimum credit score required for every mortgage.
Different home loan programs have different guidelines, and lenders may also have their own requirements.
Depending on your circumstances, potential financing options could include:
- Conventional loans
- FHA loans
- VA loans for eligible veterans and service members
- USDA Rural Development loans for eligible properties and borrowers
- HUD Section 184 loans for eligible Native American borrowers
Rather than assuming you qualify—or don't qualify—because of a score you saw on an app, it's better to have a mortgage professional look at the bigger picture.
The Credit Score You See May Not Be the Score Your Mortgage Lender Uses
This surprises a lot of people.
You may check your credit through a bank, credit card company, credit-monitoring service, or consumer app and see one score.
Then you apply for a mortgage and see a different number.
That doesn't necessarily mean anything is wrong.
There are different credit-scoring models designed for different purposes. The score provided by a consumer credit-monitoring service isn't necessarily the same scoring model used in mortgage lending.
That's why we don't recommend making major homebuying decisions based solely on the credit score displayed by a consumer app.
Those services can be excellent for monitoring your credit, but if you're preparing to buy a home, a mortgage lender can give you a better understanding of how your credit relates specifically to mortgage financing.
Your Credit Score Isn't the Only Thing That Matters
Mortgage qualification involves much more than looking at a credit score.
A lender may also consider factors such as:
Income and Employment
Can you document sufficient income to support the proposed mortgage payment and your other obligations?
Existing Debt
Car payments, student loans, credit cards and other monthly obligations can affect how much mortgage debt you may be able to comfortably qualify for.
Down Payment and Available Funds
The amount of money needed can vary depending on the loan program and transaction. Some programs may offer low-down-payment or, for eligible borrowers, no-down-payment options.
Your Overall Credit History
Your credit report contains more information than just a score. Payment history, outstanding balances, recent credit activity and other factors may also be important.
The Loan Program
Someone who doesn't fit the guidelines for one type of mortgage may have other financing options worth exploring.
A credit score is important, but it doesn't tell your entire financial story.
What If My Credit Score Isn't High Enough Right Now?
This is where people sometimes make a big mistake.
They assume their credit isn't good enough, so they decide to wait a year or two before ever talking to a lender.
That can mean wasting valuable time.
If your credit needs improvement, it's better to identify the issues before you're ready to make an offer on a house.
Depending on your individual situation, potential steps could include:
- Making payments on time
- Reducing credit card balances
- Reviewing your credit reports for inaccurate information
- Avoiding unnecessary new credit
- Keeping revolving credit balances manageable
- Developing a plan for existing debts
But don't start randomly closing accounts, opening new accounts, paying off collections, or moving money around simply because you read somewhere that it will improve your mortgage chances.
Talk to a mortgage professional first.
The right strategy depends on what's actually on your credit report and what you're trying to accomplish.
Don't Wait Until You've Found a House
One of the worst times to discover a credit problem is after you've found the house you want to buy.
If you're considering buying a home in the next several months—or even sometime next year—there's value in finding out where you stand now.
If everything looks good, you'll have a better idea of what your next steps should be.
If something needs attention, you'll have time to work on it.
Either way, you'll be making decisions based on actual information rather than guessing.
A Lower Credit Score Doesn't Necessarily Mean “No”
If your credit isn't where you'd like it to be, don't automatically assume homeownership is out of reach.
Sometimes the answer may be “not yet.”
And “not yet” is very different from “no.”
There may be steps you can take to put yourself in a stronger position. The important thing is knowing what those steps are before you start shopping for a home.
Find Out Where You Stand
If you're wondering whether your credit score is high enough to buy a home, you don't have to figure it out on your own.
At Lincoln Lending, we can help you understand how your credit fits into the bigger mortgage picture, discuss home loan programs that may be available to you, and identify potential areas to work on if you're not quite ready.
You don't need perfect credit to start the conversation.
Whether you're ready to buy now or simply planning for the future, talking with a Lincoln Lending Home Loan Coach can help you understand your next step.
Have questions about your credit and buying a home? Contact Lincoln Lending to get started.