How Credit Score Affects Home Buying

Your credit score is one of the most important factors in the home buying process. It affects your loan approval, interest rates, and overall borrowing power.

Credit Score Requirements

Different loan types have different credit score requirements:

• Conventional loans: 620+ (preferred 740+)
• FHA loans: 580+ (with 3.5% down)
• VA loans: No minimum (but lenders may require 620+)
• USDA loans: 640+ (varies by lender)

Impact on Interest Rates

Higher credit scores typically result in lower interest rates. A difference of just 50 points can save you thousands of dollars over the life of your loan.

Down Payment Requirements

Better credit scores often allow for lower down payments. Borrowers with excellent credit (740+) may qualify for conventional loans with as little as 3% down.

Improving Your Credit Score

If your score needs improvement:

• Pay bills on time
• Keep credit card balances low
• Avoid opening new credit accounts
• Check for and dispute errors on your credit report

Timeline for Improvement

Credit score improvements take time. Start working on your credit at least 6-12 months before you plan to buy a home.