The ideal credit score for home loans is at least 620 if you want to make a down payment of less than 10%. However, the higher your score, the better, as you can borrow more and get better rates.
These are tough times for many wannabe homeowners — and especially younger buyers with families. According to Zillow, as of 2026, the average American home value is $372,885, and homes go to pending in around 18 days.
You can increase your chances of success by preparing now for your purchasing moment. In addition to monthly income, lenders look at several factors when they several factors when they consider a mortgage application. Most lenders want to know your FICO® score, the most common kind of credit score.
Know the Science Behind the Magic Number
Your credit score is a number that represents the risk a lender takes when they lend you money. Your three-digit credit score is generated from information in your credit report, but the resulting number can be the difference between you qualifying for the best mortgage rates and terms, or being saddled with less attractive financing options or, worse yet, no loan at all.
A good score can help you qualify for a home loan at the lowest possible cost. Many mortgage programs require a FICO score of at least 620 if you want to make a down payment of less than 10%. If you have some savings, you might find an FHA program that accepts a score of 580 or less. Only 3% is required for a down payment for first-time homebuyers. The higher you can raise your score, the likelier you are to get approved and the better interest rate you’ll get. Interest rates can determine whether some buyers can purchase at all. Credit scores matter!
Know Your Score and Why Matters
Not only do creditors typically check your score before they approve an application, but they also use it when determining what interest rate to charge you. Your credit score plays a critical role in the options a lender can offer.
Lenders use FICO credit scores as a way to assess risk. For example, borrowers with FICO scores of at least 580 can qualify for an FHA mortgage with 3.5 percent down payment. Compare that to a buyer with a score of 500-579, for whom the FHA will require a 10 percent down payment.
For conventional mortgages, lenders typically look for a credit score of at least 620 or better to qualify for a better rate and terms.
How to Prepare for the Biggest Purchase You’ll Ever Make
UFCU Members can obtain a free online copy1 of their FICO score and credit report from Experian, one of three credit reporting companies that collect FICO information. If you’re on a journey to improve your credit with an endgame of buying a home, or some other large purchase, set out to accomplish these tasks every month:
1. Zero In on Bills and Debt
The first step is to know your debt and have a plan for reducing it. Make a list of every recurring bill, loan, and credit card balance so you know exactly what you owe each month.
This includes:
- Student loans
- Auto loans
- Personal loans
- Outstanding credit card debt
2. Pay Your Bills on Time, Every Time
Your payment history is one of the most important factors affecting your credit score, so consistency is essential when preparing for a mortgage. Paying every bill by its due date shows lenders that you can reliably manage financial obligations.
Setting up automatic payments or calendar reminders can help prevent missed due dates, especially if you have multiple accounts. It's also important to know your credit usage and keep the amounts you owe at less than 30% of those limits.
3. Choose Carefully When Applying for New Credit
Every time you apply for a new credit card or loan, the lender may perform a hard credit inquiry, which can temporarily lower your credit score.
Before opening new lines of credit, consider if they're truly necessary, especially if you're planning to buy a home in the near future. Instead, focus on responsibly managing your existing accounts.
4. Reduce Your Debt
Lowering your overall debt can improve both your credit score and your debt-to-income (DTI) ratio. The latter is what lenders use to determine how much mortgage you can comfortably afford.
Make it a habit to review your balances regularly and work toward paying down revolving debt, especially high-interest credit cards. Also, avoid maxing out your available credit, even if you can make the payments. High balances can negatively affect your credit profile.
5. Contact a Trusted Loan Officer
When you're on your way toward a healthy credit score, it's time to talk to a loan officer about getting pre-qualified for a home loan. You might be better prepared than you think.
Here are some things a loan officer can do:
- Set a price range based on your optimal monthly payment
- Estimate your probable closing costs
- Evaluate your eligibility for special programs like VA, HUD, rehab loans, first-time homebuyer, Community Hero, and more
- Recommend actions if your file is not ready to move forward
- Clarify lender rules, for example about remote work, residency, and getting a co-signer or down-payment help from family
- Recommend a trustworthy real estate agent
- Provide the pre-approval letter that’s needed when making an offer
Much of the information a loan officer needs can be submitted 100% online. Even if you aren't shopping yet, it's a good idea to gather as much information as you can for when homeownership opportunity knocks.
Frequently Asked Questions (FAQs)
Is 600 a Good Credit Score?
A credit score of 600 is generally considered fair rather than good. It doesn't place you among the highest-risk borrowers, but it can still limit your borrowing options and make financing more expensive.
Some lenders may still approve a mortgage or other loan, but you may face:
- Higher interest rates
- Larger down payment requirements
- Additional documentation during underwriting
A score of 600 can also affect your ability to qualify for premium credit cards or favorable auto loan terms.
How to Go from a 600 to a 700 Credit Score Fast?
There's no guaranteed shortcut to increasing your credit score by 100 points, but some strategies can produce meaningful improvements relatively quickly.
Start by reviewing your credit reports for errors, such as accounts that don't belong to you or incorrect late-payment records. Dispute any inaccuracies you find.
If a family member with excellent credit is willing to add you as an authorized user on a long-established credit card, you may benefit from their positive payment history. In addition, avoid closing older accounts unnecessarily, since the length of your credit history contributes to your overall score.
Can You Get a Mortgage with a Credit Score of 450?
Getting a mortgage with a credit score of 450 is difficult, but it's not impossible. Traditional lenders are unlikely to approve an application at that level since it signals a very high lending risk.
However, some borrowers improve their chances by:
- Delaying their purchase while rebuilding credit
- Increasing their savings for a larger down payment
- Applying with a financially stronger co-borrower
Certain local housing assistance programs or specialized lenders may also offer alternative pathways, but these often come with stricter qualification requirements and higher borrowing costs.
Have a Good Credit Score Before Applying for a Mortgage
Having the best credit score possible before applying for a mortgage can ensure that you get the best options possible. In some cases, it may be worth waiting, especially if you can take steps to raise your score, as that can help save some money.
UFCU Mortgage Services has been named the top mortgage originator in Central Texas for several years running. We invite you to calculate what you qualify for or apply now.2
1 Through UFCU’s partnership with myfico.com.
2 UFCU home loans subject to credit eligibility. Certain restrictions apply.
Home Mortgage Disclosure Act Notice
UFCU originates loans to purchase properties in Texas only.