You need a minimum credit score of 500 to 700 to buy a home in 2023. Lenders favour applicants with higher credit scores, but getting a mortgage with a lower credit score is possible. 

The best manoeuvre is avoiding conventional loans, which require a minimum credit score of 620. Other loan types allow for lower credit scores; some do not have these requirements. 

Minimum Credit Score Requirements By Loan Type 

There are five mortgage loans you might request: conventional, Federal Housing Administration (FHA), Veterans Affairs (VA), Jumbo, and United States Department of Agriculture (USDA) loans. 

Conventional Loans

Conventional loans require a 620 credit score. The government does guarantee home buyers who apply for this loan type. It’s recommended for people with higher credit scores and enough money for a down payment.  

You may need to pay a minimum deposit of 5%. However, lenders and banks can sometimes increase your deposit limit based on your credit score. 

FHA Loans

FHA loans require a minimum credit score of 580. The Federal Housing Administration backs the mortgage, and lenders only require a 3.5% down payment. 

You can also qualify for the loan type with a 500 credit score if you make a 10% down payment. On the plus side, FHA doesn’t charge interest according to your credit score, and loans take 15 years or longer. 

VA Loans

There is no minimum credit score requirement for qualified service members and veterans requesting VA loans. Some lenders will request a 580 credit score. 

VA loans have low-interest rates and don’t often require a down payment. However, you must have a Certificate of Eligibility issued by the US Department of Veteran Affairs.  

USDA Loans

USDA loans require a minimum credit score of 580. You don’t need to make a down payment, and the interest rates are often pretty low.

You can qualify for this loan type if you plan to live in a qualified rural or suburban area and have an income lower than 115% of the area’s median income.  

Jumbo Loans

There’s no specified minimum credit score for this mortgage type. It often applies to home buyers requiring higher mortgage loans than given conventional mortgage loans. 

So, the higher your credit score, the more chances you have of getting a loan. Depending on your credit score and income, you might qualify for lower interest rates but require a 5% to 25% down payment.