What Credit Score Do You Need to Buy a House?

🏠 Introduction: Why Your Credit Score Feels Like a Barrier

Imagine this: you’ve saved up a down payment, you’ve found the perfect house, and you go to your lender—only to be told your credit score is holding you back. It’s a crushing moment.

For many aspiring homeowners, “What credit score do you need to buy a house?” isn’t just a curiosity—it’s a gatekeeper. And the truth is, the answer isn’t simple. It depends on where you live (U.S. or Canada), which type of mortgage you aim for, and how much financial wiggle room you have.

In this post, we’ll:

• Explore credit score expectations in the U.S. and Canada
• Show how different loan types shift those expectations
• Walk you through pitfalls and obstacles—and offer fixes
• Show you what a “good enough” score looks like
• End with action steps to improve your chances

Let’s break it down and demystify this intimidating barrier.

📊 Credit Score Ranges & What They Mean to Lenders

Before digging into minimums, it’s helpful to see how credit scores are widely categorized and how lenders view them.

Score Range	U.S. (FICO) / Canada (typical ranges)	Lender’s View	Likely Mortgage Terms
Very Poor	< 580 (U.S.) / < 600 (Canada)	High risk	Hard to qualify; very high rates
Fair / Below Average	580–619 / 600–649	Marginal risk	May get a loan with higher interest rate or stricter terms
Good	620–699 / 650–699	Acceptable risk	Qualify for many standard mortgages
Very Good / Strong	700–749 / 700–749	Low risk	Better interest rates, more options
Excellent	750+ / 750+	Very low risk	Access to best rates and terms

These brackets are illustrative—not fixed rules. For example, in the U.S., many conventional mortgage lenders look for a minimum credit score of 620 as a baseline. (experian.com) Meanwhile, in Canada, traditional mortgages often require a minimum around 680 or more, though flexibility exists. (NerdWallet)

🇺🇸 U.S. Mortgage Credit Score Expectations

Conventional Loans: The 620 Rule

• Many lenders require at least 620 for a conventional (non-government backed) mortgage. (Chase)
• Some lenders may demand 660 or even 700 depending on risk factors (income, debt, down payment). (experian.com)
• If you fall below 620, your options may be limited to government-backed or subprime products.

FHA, VA, and USDA Loans

Government-backed loans often permit lower minimums:

Loan Type	Typical Minimum Credit Score	Notes / Conditions
FHA	500 to 580	If your down payment is 10%, some lenders allow 500; otherwise 580 is typical. (experian.com)
VA	~620 (often)	VA does not set a fixed minimum, but lenders usually expect ~620. (experian.com)
USDA	~580	Some USDA-eligible buyers qualify at 580+. (experian.com)

Even with these more forgiving programs, having a higher score still opens doors to lower interest rates.

Why Lenders Care: Risk & Rate Pricing

Lenders view a credit score as shorthand for risk. If your score is lower, they expect higher likelihood of default. So they:

• Charge higher interest rates
• Impose stricter down payment or reserve requirements
• Increase fees or reject your application outright

A small improvement (say, 20–30 points) in your credit score can tilt your mortgage terms from “usable but expensive” to “comfortable and competitive.” (Fidelity)

Realistic Scenarios

• Score: 610–619 — You may only qualify for FHA or riskier loans, with high rates and stricter conditions.
• Score: 620–639 — You may qualify for a conventional loan, but expect interest rate penalties.
• Score: 640–699 — You’re in safer territory; many favorable conventional options.
• Score: 700+ — You open the door to best pricing and loan flexibility.

🇨🇦 Canada Mortgage Credit Score Expectations

Credit Scoring in Canada: How It Works

In Canada, credit scores generally range from 300 to 900. Lenders use them (via Equifax, TransUnion) to gauge borrowers. (manulifebank.ca)

CMHC (the government mortgage insurer) requires at least a 600 score for insured mortgages (if the down payment is less than 20%). (springfinancial.ca)

However, many conventional lenders target a 680 threshold to offer the better interest rates. (NerdWallet)

Minimum vs. Optimal

Scenario	Minimum Score	Optimal Score	Risks / Tradeoffs
With CMHC Insurance	600 (springfinancial.ca)	–	Some lenders won’t lend at that low; expect higher rates
Traditional Uninsured Mortgage	~680 (NerdWallet)	700+	Best rates and terms reserved for stronger scores
Alternative Lenders	600 or even lower (springfinancial.ca)	–	Likely higher rates, stricter terms

Note: In 2021, CMHC lowered its minimum credit score requirement from 680 to 600 for insured mortgages. (RE/MAX Canada) But that doesn’t automatically translate to all lenders adopting 600 as their floor.

Real-Life Expectations

• Score: < 600 — Very limited traditional options; high rates if any.
• Score: 600–679 — Some lenders will offer mortgages, but expect interest rate markups.
• Score: 680–749 — You’re in the decent zone; qualifying is realistic.
• Score: 750+ — You access truly favorable mortgage terms.

🚧 Pain Points Buyers Face & How to Solve Them

Many would-be homeowners bump into obstacles around credit. These are common pain points—and practical ways to handle them.

1. “My credit score is just too low; I’m stuck.”

Solution: Start improving now.

• Pay bills on time (this is the biggest single factor).
• Reduce credit card balances—keep utilization under 30%.
• Avoid opening too many new accounts or hard inquiries.
• Hold on to older credit lines (length of history matters).
• Dispute errors on your credit report immediately.

These steps won’t fix things overnight, but over 6 to 12 months, you can often see significant gains.

2. “I have no credit history.”

Solution: Build it strategically.

• Get a secured credit card or a small credit-builder loan.
• Use the card for small purchases and pay it off fully each month.
• Become an authorized user on someone else’s account (if possible).
• Use rent reporting or utility payment services (in markets where accepted).

Even modest, consistent activity can create a positive footprint.

3. “Lenders are rejecting me—even though my income is good.”

Credit score is just one piece of the puzzle. Lenders also look at:

• Debt-to-income ratio (DTI)
• Employment and income stability
• Down payment size
• Cash reserves

If your score is borderline, strengthen your position elsewhere: reduce existing debt, increase down payment, or secure a co-signer.

4. “I can qualify—but the rates are sky-high.”

Your score may allow a loan, but at a price.

• Shop around—rates vary among lenders.
• Wait and improve your credit before applying.
• Consider reducing your loan size or shortening the amortization.
• Use discount points (if acceptable) to reduce your rate.

5. “Credit bureaus show errors dragging me down.”

Errors are more common than people think.

• Order your full credit report from each bureau and review line by line.
• If you see incorrect negative marks, file a dispute.
• Follow up persistently and escalate if needed (ombudsman, regulatory bodies).
• Document every interaction.

Correcting a misreport could boost your credit score significantly in weeks.

📈 How Much Does a Better Credit Score Save You?

Let’s imagine two buyers in the U.S.:

• Buyer A: credit score 620
• Buyer B: credit score 740

Assume both take a 30-year fixed conventional mortgage of $300,000 at the same base rate. Because Buyer B is seen as lower risk, their rate might be ~0.5% lower or more. Over the life of the loan, that difference could equal tens of thousands of dollars in interest savings.

In Canada, the pattern is similar: higher scores get better pricing tiers. A small boost in score can push you into a more favorable “pricing bucket.”

Some Canadian lenders adjust rates in 10–20 point credit bands. (borrowell.com)

Thus, investing time to raise your score earlier rather than later can pay for itself many times over.

✅ What “Good Enough” Looks Like in 2025

If you’re preparing to buy soon, here’s a ballpark target you should aim for:

• In the U.S.: at least 620 for conventional, 580–600+ if using FHA/alternative options
• In Canada: at least 600 if needing CMHC insurance, ~680 or higher for better rates

But more importantly: your credit score doesn’t operate in a vacuum. The stronger your income, the lower your debt, the bigger your down payment, the more forgiving lenders may be.

Step-by-Step Plan to Improve Your Score Before Applying

Let’s turn all this insight into a practical action plan.

1. Request your latest credit reports and scores from all bureaus (in both U.S. and Canada, you’re legally entitled to view certain reports).
2. Review carefully—mark any errors, outdated accounts, or suspicious items.
3. Dispute inaccuracies immediately with evidence and follow up.
4. Pay down high-interest debts, especially credit card balances.
5. Keep utilization low—try to stay under 30%, ideally under 10%.
6. Make every payment on time—late payments can wreck momentum.
7. Avoid new credit applications in the months before applying for a mortgage.
8. If needed, use a co-signer or guarantor to bolster your application.
9. Consider waiting and reapplying once your score improves.
10. Shop pre-approvals with multiple lenders to see which terms you qualify for.

If you follow these steps over 6–12 months, many buyers see dramatic improvements—sometimes 50–100 points.

Real Stories & Cautionary Tales

• “I was stalled with a 600 score.” One buyer I spoke to was denied by two lenders, but got approved after improving to 650. The boost came from clearing collections and consolidating debt.
• “Gave in and accepted a bad rate.” Some feel pressured to take whatever rate they can get. That often locks you into excessive interest for decades.
• “Assumed co-signers would help.” Unfortunately, many lenders still view the primary applicant’s credit first; the co-signer is backup.
• “Charged high fees instead of rate.” One buyer got “approved,” but the lender added expensive closing costs and “credit risk fees.” Always read the fine print.

These stories drive home the principle: just because you can get a mortgage doesn’t mean it’s a smart one.

⏳ Timing: When to Begin the Credit Prep

If you plan to buy in the next 12–24 months, start today.

• 12–24 months ahead: get your baseline score, dispute errors, build credit, reduce debt
• 6–12 months ahead: sharpen focus—pay down debts aggressively, avoid new accounts
• 3–6 months ahead: lean into lender shopping, get pre-approvals, and lock your rate

Don’t rush into applying with a weak credit profile. The “cost” of waiting often pays off with better terms and less stress.

🌍 Regional Considerations & Market Nuances

• U.S. lenders increasingly accept alternative credit data (e.g. rent payments, utilities) under newer scoring models.
• The VantageScore 4.0 model is now allowed for Fannie Mae / Freddie Mac mortgages, which may include nontraditional payment data. (Wikipedia)
• In Canada, mortgage insurance rules (via CMHC) matter more in pricing than credit alone. Some buyers may access insured mortgages at lower scores, albeit with additional premiums. (springfinancial.ca)
• Market conditions (interest rates, housing demand) also affect how lenient lenders are with credit requirements.

🧩 Summary & Key Takeaways

• The minimum credit score you need depends on your country, loan type, and lender—but it’s not an absolute ceiling.
• In the U.S., 620 is a common floor for conventional mortgages. Below that, FHA/VA/USDA options may help.
• In Canada, many lenders prefer 680+, though insured mortgages may permit 600+.
• A stronger credit score means lower interest rates, fewer fees, and more negotiating power.
• If your current score is weak, you’re not doomed—you can rebuild and improve systematically.
• Always monitor credit, dispute inaccuracies, control debt, and delay applying until your numbers are strong.

Getting house-ready is more than finding the right neighborhood—it’s preparing your credit profile well in advance. Start early, stay consistent, and you’ll turn what feels like a barrier into a leap toward homeownership.

FAQs: Your Top Questions Answered

1. Can I buy a house with a credit score below 600?
In the U.S., possibly—but only with FHA or subprime lenders, often at much higher rates. In Canada, there are rare cases via alternative lenders, but traditional banks will likely reject such an application.

2. How much does my credit score affect interest rates?
Even a 20–50 point difference can shift you into a different “pricing bucket,” costing thousands over a 20- or 30-year loan.

3. Do lenders accept “alternative credit data” (rent, utilities)?
Yes—increasingly so, especially under newer scoring models like VantageScore 4.0 in the U.S. (Wikipedia) But acceptance varies by lender.

4. If I have bad credit now, how long until it’s good enough?
It depends on how low you start and how aggressively you act. Some borrowers see 50–100 point improvements in 6–12 months with disciplined effort.

5. Should I apply for multiple mortgages to see who gives the best rate?
Yes—but do it wisely. Multiple mortgage-related credit pulls within a short window are usually treated as a single inquiry by credit models (so your score isn’t penalized heavily).