How Credit Score Impacts Your Home Buying Process

Your credit score might be just a number, but it plays a major role in whether you get approved for a mortgage, what your interest rate looks like, and how much house you can afford.

In this guide, we’ll unpack what credit scores really mean for first-time buyers, how to read yours, and how to boost it, no shame, just strategy.

Why Credit Scores Matter When Buying a Home

When you apply for a mortgage, lenders use your credit score to decide two things:

1. Whether to approve your loan
2. What interest rate and terms to offer

A higher score signals reliability and lowers risk for lenders, which can mean lower rates and fewer fees for you. A lower score doesn't mean a hard "no," but it might mean higher costs or fewer options.

Your credit score impacts:

• Loan approval odds
• Interest rate (APR)
• Down payment requirements
• Loan program eligibility (like FHA, VA, or conventional)

What Credit Score Do You Need to Buy a House?

There’s no universal number, but here are general guidelines for common loan types:

• FHA loans: 580+ (with 3.5% down); 500-579 (with 10% down)
• VA loans: Often 620+, but can vary
• Conventional loans: 620+ minimum, with best rates at 740+
• USDA loans: Usually 640+

So, what is a good credit score to buy a house? Most buyers aim for at least 620, but you’ll unlock better terms at 700+.

How Credit Scores Impact Mortgage Rates and Terms

Here’s the real kicker: the better your score, the less you might pay over the life of the loan.

Let’s say you’re buying a $300,000 home with 10% down:

• At 760+, you might qualify for a 6.5% interest rate.
• At 620, your rate might jump to 7.75% or more.

That 1.25% difference could mean over $250/month in added costs, or more than $90,000 across a 30-year loan.

Can You Buy a Home With a Low Credit Score?

Yes, but be strategic. FHA loans exist to help buyers with lower scores. Some state and city programs also help those with limited credit history or past challenges.

What matters most:

• Stable income and employment
• Low debt-to-income ratio
• Savings for a larger down payment

And with Foyer, you don’t have to guess. Our advisors help you evaluate your profile and next steps, privately and without pressure.

How to Improve Your Credit Score Before Buying

Improving your score can open better mortgage options and save you thousands. Here’s how:

1. Check your report for errors (go to annualcreditreport.com)
2. Pay all bills on time
3. Keep credit card balances low (under 30% of the limit)
4. Avoid new credit cards or loans before applying
5. Become an authorized user on someone’s well-managed account

Foyer's guide to building credit has more tips tailored for homebuyers.

Understanding Your Credit Report

Your credit score is calculated from your credit report. Key factors include:

• Payment history (35%)
• Amounts owed (30%)
• Length of credit history (15%)
• Credit mix (10%)
• New credit (10%)

Get a free report from Equifax, Experian, and TransUnion. If something looks off, dispute it, you might be surprised by how much your score can rise.

What's the Highest Credit Score and Do You Need It?

The highest credit score possible is 850, but it’s not required to get a great loan.

Most lenders reserve the best rates for scores above 760. Beyond that, there’s little benefit. Focus on building strong, consistent credit habits rather than chasing perfection.

And no, a "900 credit score" isn’t possible on the standard FICO scale.

How Foyer Helps You Prepare Financially

Foyer isn’t just about saving. We help you prep every part of your homebuying profile, including credit:

• 1-on-1 Homeownership Advisors help decode your credit and make a plan
• FHSA accounts let you save up to 6% faster with matched contributions
• Education tools guide you through budgeting, credit-building, and timelines

Whether you're ready to buy or just figuring out your score, we meet you where you are.

Start Building with Foyer

Related Resources and Next Steps

Keep learning and get clarity:

• Building Credit for Your Dream Home: A Complete Guide
• Am I Ready to Buy My First Home? A Complete Guide
• How to Build Credit as a First-Time Homebuyer

When it comes to credit and homebuying, Foyer helps you take the guesswork out. Your future home starts with your next smart move.