What’s the minimum credit score to buy a house that lenders are looking for?

The minimum credit score needed to buy a house isn’t set in stone and in fact, it can change quite often especially during and after a recession when the economy is on a downturn. It’s not unusual for lenders to enforce tighter restrictions on borrowing when the economy is shrinking instead of expanding. In the wake of the housing collapse, for instance, applicants with credit scores of 720 and above were getting rejected for mortgage loans.

Fortunately, the real estate market has improved dramatically since 2008 and lenders have eased up a bit in terms of the minimum credit score they’re looking for. The minimum score also depends on the type of loan you’re applying for.

Not sure which category you’re in? Check your credit score for free on Credit Sesame.

With a conventional loan for a house that’s backed by Fannie Mae or Freddie Mac, for example, the minimum score required is set at 620. But the lowest credit score to buy a house with an FHA loan is 580.

Keep in mind, however, that individual lenders may raise the bar higher based on other factors, such as your income or how much of a down payment you’re putting down. That also affects your interest rates. As a generalization, the average credit score to buy a house is 600 or above.

The following chart shows the average scores of Credit Sesame members. Where do you fall?

For example, let’s say you have a 640 credit score and you want to buy a $200,000 home. You have $20,000 to put down which qualifies you for an interest rate of 5%. At that rate, you’ll pay nearly $170,000 in interest on the loan. If you could bump your down payment up to $40,000, which is 20% of the purchase price, you’d get a rate of 4.5% instead. That would shave roughly $35,000 off the interest charges.

Credit Sesame members who have mortgages actually have higher credit scores than those who do not.