For most Americans, buying a home is one of the most significant purchases they will make in their lifetime. As a result, it is in your best interest to set yourself up as best as you can to improve your odds of success in the mortgage application process.
Your FICO score is the difference between getting an amazingly low rate or having to agree to more costly borrowing terms. While everyone wants a perfect score in many cases, it becomes a matter of waiting versus seizing a good opportunity.
If you’re trying to decide if you can proceed with your mortgage application, here is what you should know about the minimum FICO score for a mortgage.
Your FICO score consists of the following information from your credit report:
Good news! There is no official minimum score because lenders can (and will) take some other factors into consideration when reviewing your mortgage application. It is possible to be approved for a mortgage if you have a lower credit score if you provide a substantial down payment or your debt load is fairly low. Since your FICO score is just one factor in determining if you’ll be approved, a low FICO score won’t necessarily prevent you from getting a mortgage.
While a score of 850 is the highest FICO score you can get, there are ranges that lenders consider to be good or bad:
740–850: Excellent credit – Borrowers with FICO scores in this range receive the best interest rates and are easily approved for loans.
670–740: Good credit – In most cases, borrowers with FICO scores in this range are usually approved and are able to obtain good interest rates.
620–670: Acceptable credit – Borrowers are generally approved but are likely to receive higher interest rates.
580–620: Subprime credit – It is possible for borrowers to be approved for a mortgage but approval is not guaranteed. The mortgage terms will also likely be unfavorable.
300–580: Poor credit – A borrower will likely have no chance of getting a mortgage. In most cases, borrowers must first take steps to improve their credit before they are approved.