Quick Answer: Minimum Credit Scores by Loan Type
Conventional Loans
620
FHA Loans
580
VA Loans
620
USDA Loans
640
Your credit score is one of the most important factors in mortgage qualification. It determines not just whether you'll be approved, but also what interest rate you'll pay. The median credit score for new mortgage borrowers in Q1 2025 was 772, but you can qualify with much lower scores using the right loan program.
Credit Score Requirements by Loan Type
Conventional Loans
Minimum Score: 620
Score Breakdown:
- 620-639: Approved but higher rates (0.5-1% premium), 10% down payment
- 640-659: Good rates, 5-10% down payment options
- 660-679: Very competitive rates, 3-5% down payment
- 680-699: Excellent rates, 3% down payment available
- 700+: Best rates available, maximum flexibility
- 740+: Premium rates, fastest approval (median 2025 score)
Conventional loans are the most common mortgage type. Fannie Mae and Freddie Mac set the standards. With a 620 score, expect to pay 0.5-1% more in interest than a 740+ borrower. On a $300,000 loan, that's $150-300 more per month.
Get preapproved for a conventional loan →FHA Loans (Federal Housing Administration)
Minimum Score: 580 (Lowest Available!)
Score Breakdown:
- 580-599: Approved with 10% down payment, mortgage insurance required
- 600-619: Better rates, 3.5% down payment available
- 620-639: Competitive rates, standard FHA terms
- 640+: Best FHA rates, maximum flexibility
FHA loans are designed for first-time homebuyers and those with lower credit scores. The trade-off: you'll pay mortgage insurance premiums (MIP). Annual MIP ranges from 0.40-0.75% of your loan amount. If your down payment is less than 10%, you'll pay MIP for the life of the loan.
Real Example: A 580-score borrower with a $250,000 FHA loan pays $937/month in mortgage insurance alone. That's $337,320 over 30 years. But if you improve to 620+, you might qualify for conventional and avoid this cost entirely.
Explore FHA loan options →VA Loans (Veterans Affairs)
Minimum Score: 620 (No Down Payment!)
Score Breakdown:
- 620-639: Approved with 0% down, no mortgage insurance
- 640-659: Competitive rates, faster approval
- 660+: Best VA rates, maximum benefits
VA loans are exclusive to eligible veterans and active-duty service members. Major advantage: 0% down payment and NO mortgage insurance, even with a 620 score. This saves thousands compared to FHA loans.
Real Example: A veteran with a 620 score buying a $300,000 home pays $0 down and $0 in mortgage insurance. A comparable FHA borrower pays $10,500 down (3.5%) and $937/month in MIP. Over 30 years, the VA borrower saves $337,320!
Check VA loan eligibility →USDA Loans (Rural Development)
Minimum Score: 640
Score Breakdown:
- 640-659: Approved with 0% down, mortgage insurance required
- 660+: Best USDA rates, standard terms
USDA loans are for rural homebuyers with moderate income. Like VA loans, they offer 0% down payment. However, you'll pay mortgage insurance (similar to FHA). Eligibility depends on property location and income limits.
Learn about USDA loan requirements →How Credit Score Impacts Your Mortgage Rate
Your credit score directly determines your interest rate. Here's a realistic breakdown for a $300,000 conventional mortgage in October 2025:
| Credit Score | Interest Rate | Monthly Payment | 30-Year Total Interest |
|---|---|---|---|
| 620 | 7.25% | $1,984 | $414,240 |
| 660 | 6.75% | $1,896 | $382,560 |
| 700 | 6.25% | $1,792 | $345,120 |
| 740+ | 5.99% | $1,799 | $347,640 |
💰 The Real Cost: Improving your score from 620 to 740+ saves you $185/month ($66,600 over 30 years). That's why spending 3-6 months improving your credit before applying is worth the wait!
How to Improve Your Credit Score Before Applying
Quick Wins (30-60 Days)
- Pay down credit cards - Reduce balances to under 30% of limits
- Fix errors - Dispute inaccuracies on credit report
- Make on-time payments - 35% of score is payment history
- Become an authorized user - Piggyback on someone's good credit
Long-Term Strategies (3-12 Months)
- Build credit history - Secured credit card or credit builder loan
- Keep old accounts open - Length of history matters (15%)
- Diversify credit types - Mix of credit cards, loans, etc.
- Avoid new inquiries - Each hard inquiry lowers score 5-10 points
Pro Tip: Get your free credit report at AnnualCreditReport.com (official government site). Review for errors and dispute inaccuracies. This alone can boost your score 20-50 points in 30 days if errors exist.
Ready to Get Preapproved?
Even with a lower credit score, you can get preapproved in minutes. Find out exactly what you qualify for and what rate you'll get.
Get Preapproved Now →Frequently Asked Questions
Key Takeaways
Conventional loans require minimum 620 credit score
FHA loans accept scores as low as 580 (lowest available)
VA loans offer 0% down with no mortgage insurance
USDA loans also offer 0% down for rural properties
Each 20-point score improvement saves $100-200/month
Improving your score before applying saves $50K-100K+
Payment history is 35% of your credit score
Credit card utilization should be under 30%
Hard inquiries temporarily lower your score 5-10 points
Multiple mortgage inquiries within 45 days count as one
Dispute credit report errors immediately
Secured credit cards help build credit quickly
Know Your Credit Score Before Applying
Your credit score determines your mortgage rate and approval chances. Get preapproved today to see exactly what you qualify for and what rate you'll receive.
Get Your Personalized Rate Quote →About Sarah Mitchell
Sarah Mitchell is a Mortgage Specialist with 12+ years of experience helping homebuyers navigate credit scores, loan options, and the mortgage process. She's NMLS certified and has helped thousands of borrowers improve their credit and secure favorable mortgage terms. Sarah is passionate about demystifying mortgage requirements and empowering buyers to make informed decisions.
📍 Mortgage Expert | Credit Specialist | NMLS Certified