Most mortgage lenders require a minimum credit score of 620 for a conventional loan, though government-backed options can go lower. Your score also directly affects the interest rate you’ll pay, with borrowers at the top of the credit spectrum saving thousands of dollars per year compared to those near the minimum. Here’s what you need to know about where the cutoffs fall and what your score actually costs you.
Minimum Scores by Loan Type
The score you need depends on which type of mortgage you’re applying for. Conventional loans, the most common type sold to Fannie Mae or Freddie Mac, generally require a 620 FICO score at minimum. Some lenders set their own floors higher, at 640 or 660, even though the agencies technically allow 620.
FHA loans are designed for borrowers with weaker credit. You can qualify with a score as low as 580 if you put at least 3.5% down. Scores between 500 and 579 are technically eligible too, but you’ll need a 10% down payment, and many lenders won’t go that low regardless of what FHA allows.
VA loans, available to eligible military members and veterans, have no official minimum score set by the Department of Veterans Affairs. In practice, most VA lenders look for at least a 620. USDA loans, which help buyers in eligible rural areas, similarly have no hard government-set floor but typically require a 640 from participating lenders.
How Your Score Affects Your Interest Rate
Meeting the minimum gets you through the door, but your score keeps working after that. Lenders price risk into your rate, and the difference between a mediocre score and an excellent one is real money every month.
On a $350,000 30-year fixed mortgage, a borrower with a 620 score might see a rate around 7.59%, while someone with a 780 or higher could get roughly 6.81%. That gap of about three-quarters of a percentage point works out to approximately $185 per month, or $2,220 per year. Over 30 years, that’s more than $66,000 in extra interest.
The rate improvements aren’t evenly distributed across the score range. The biggest drops tend to happen as you climb from the low 600s into the low 700s. Once you’re above 740, the rate reductions get smaller with each jump. Here’s a general picture of how 30-year rates vary by score tier, based on a $350,000 loan:
- 620: ~7.59%
- 660: ~7.33%
- 700: ~7.13%
- 740: ~6.96%
- 780+: ~6.81%
Fifteen-year rates follow the same pattern but with a much narrower spread, hovering around 6.08% to 6.12% across most score tiers. If you’re planning on a shorter loan term, your credit score still matters but has less dramatic pricing impact.
Mortgage Insurance Adds Another Layer
If you put less than 20% down on a conventional loan, you’ll pay private mortgage insurance (PMI). PMI protects the lender if you default, and your credit score influences how much it costs. Borrowers with lower scores pay higher PMI premiums, which can add $100 to $300 or more per month on top of your mortgage payment. This means a lower credit score hits you twice: once through a higher interest rate and again through more expensive insurance.
FHA loans carry their own version of mortgage insurance regardless of your down payment amount. The upfront premium is 1.75% of the loan amount, and the annual premium (split into monthly payments) runs between 0.45% and 1.05% depending on your loan term and down payment size.
Which Credit Score Lenders Actually Use
You likely have dozens of credit scores from different models and bureaus. Mortgage lenders don’t use the free score you see on your banking app. They pull FICO scores from all three major bureaus (Equifax, Experian, and TransUnion), and the selection process follows specific rules.
If a lender pulls three scores for you, they use the middle one. If they pull two, they use the lower one. So if your scores come back as 720, 705, and 690, your qualifying score is 705.
For joint applications, the math gets stricter. Each borrower’s representative score is determined individually using the middle-or-lower rule above. Then the lender takes the lowest representative score among all borrowers on the loan. If your middle score is 740 and your co-borrower’s middle score is 680, the loan is priced and qualified at 680. This is worth knowing before you add someone to your application, since a co-borrower with a lower score can push your rate higher even though their income helps you qualify for a larger loan.
Credit Scoring Models Are Changing
Fannie Mae and Freddie Mac are in the process of updating which scoring models they accept. For years, they relied exclusively on older “Classic FICO” scores. Now, approved lenders can also deliver loans using VantageScore 4.0 scores. Your lender chooses which model to use on a given loan, though they can only submit one model per loan, not a mix.
A newer model, FICO 10T, is also on the horizon. Fannie Mae and Freddie Mac expect to publish historical FICO 10T score data in summer 2026 and adopt the model at a later date. Eventually, lenders will be required to deliver both FICO 10T and VantageScore 4.0 scores with every loan. These newer models weigh trending data (whether your balances have been rising or falling over time) more heavily, which could help borrowers who’ve been actively improving their credit.
Options Below the Standard Minimums
If your score falls below 620 and an FHA loan doesn’t fit your situation, non-qualified mortgages (non-QM loans) are another path. These are offered by lenders who don’t sell their loans to Fannie Mae or Freddie Mac, so they set their own rules. Non-QM lenders work with borrowers that conventional lenders might turn away due to low scores or non-traditional income like freelance earnings or investment income.
The trade-off is cost. Non-QM loans typically come with higher interest rates and larger down payment requirements to offset the lender’s added risk. There are no standardized score floors since each lender sets its own guidelines, so shopping around matters even more in this space.
What to Do Before You Apply
Since even small score improvements can meaningfully lower your rate, it’s worth spending a few months on credit cleanup before applying if you’re not in a rush. Paying down credit card balances has the fastest impact, since your credit utilization ratio (how much of your available credit you’re using) is one of the biggest factors in your score. Getting utilization below 30% helps, and below 10% is even better.
Check your credit reports from all three bureaus for errors. Mistakes like accounts that aren’t yours, incorrect balances, or debts that should have aged off can drag your score down. Disputing and correcting these through the bureaus is free and can result in a score bump within 30 to 45 days.
Avoid opening new credit accounts or making large purchases on credit in the months leading up to your mortgage application. New inquiries and rising balances can both lower your score at exactly the wrong time. If you’re close to a score threshold, like sitting at 615 and trying to reach 620, or at 735 aiming for 740, even a 10-point improvement can save you meaningfully on your rate or open the door to a loan type you wouldn’t otherwise qualify for.