What Credit Score Do You Need to Buy a House?
If you’re in the market for a new home, it’s extremely important to have good credit. That means staying on top of your credit score months before even considering a purchase.
Prospective buyers often ask, “what credit score do you need to buy a house?” Unfortunately, this isn’t the easiest question to answer, because credit isn’t one dimensional.
Sure, I could tell you that a credit score above 720 would be sufficient to get a mortgage, but there’s more to the story. Just because you have a good credit score doesn’t mean you’re out of the woods. Issues like income, assets, and employment also come into play.
In other words, one prospective buyer with a stellar credit score may still be unable to buy a house, while someone with what is known as average or poor credit will be able to get financing for that same home.
For the sake of simplicity, a credit score above 720 will basically allow you to buy that house, assuming all the other guidelines are met, like assets and employment. With this type of credit score, you should be able to qualify for financing with any bank or lender, and you may even get a rebate on your interest rate.
Credit scores between 660 and 720 are typically good enough to qualify for a mortgage, though recently guidelines have become more stringent. If your credit score falls below 660, you may have more trouble, or your options may be limited. Those with credit scores below 620 are considered subprime (subprime lenders), and will have to find financing via a bad credit lender, or perhaps via the government. A VA or FHA loan may be your best bet in this situation.
In conclusion, it’s important to understand that there isn’t a specific credit score you need to buy a house. If you pay with cash, you don’t need credit. And some programs don’t even have a minimum credit score. However, the difference in credit score will dictate the interest rate you receive, so it is imperative to stay on top of your credit. If you’re planning to purchase a home in the next few months, order a free credit report to see where you stand. If anything is out of whack, fix it fast, as it sometimes takes months for credit scores to get updated.