What credit score do you need to buy a house?

If you want to make the switch from renting to owning a home, a good credit score can be essential for getting your foot in the door. While credit scores aren't the only thing lenders consider for mortgage approval, they do carry a lot of weight. So, what is a good credit score to buy a house? The answer can depend on the type of home loan you're applying for.

Credit score is one of the most important factors in buying a house, as lenders use it to gauge how likely you are to repay a home loan. The higher your credit score, the easier it can be to get approved for a mortgage, as well as help unlock lower interest rates on the loan.

So, does that mean it's impossible to get a mortgage loan with a low credit score? Not necessarily. Some mortgage lenders will lend to borrowers with less than stellar credit. However, a lower score could limit your down payment options to qualify (i.e. you may need to make a bigger one), and your loan may come with a higher interest rate — making the cost of home ownership more expensive.

Three of the most widely used credit bureaus that provide credit reports are Experian, Equifax and TransUnion. You can get a free copy of your credit report every year from all three bureaus by visiting AnnualCreditReport.com , a site authorized by the federal government.

For most mortgage types, the minimum credit score requirement is 620. This would put you in the “fair credit” range using the FICO score model. (A good credit score is 670 or higher, according to FICO.) But it’s possible to qualify with a credit score below that range, depending on the type of mortgage loan.

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The information used to calculate your credit scores under the FICO model is drawn from your credit reports. When the information in your credit report changes, your credit score can change. (Note: Banking history doesn’t affect your credit score, nor does your employment history, race, age or gender.)

Lenders want reassurance you’ll be able to repay your loan on time. They’ll consider your debt-to-income ratio or DTI, which reflects the percentage of your income that goes to debt repayment each month. The less of your income that’s designated for debt repayment, the better.

Mortgage lenders also analyze the loan terms and the size of your down payment. For example, a larger down payment could help you to qualify for a lower interest rate as the loan becomes less risky for the lender. Increasing your down payment can have another positive side effect if it allows you to avoid paying private mortgage insurance (PMI). Opting for a shorter loan term could also help you to get a lower rate.

If you want a boost to your down payment, check to see if you qualify for Ally Home Grant . Those who are eligible can get a $5,000 grant toward their down payment and closing costs, and the money does not need to be repaid.

Less than perfect credit? It’s still possible to qualify for a mortgage loan. To start, you will need to know the mortgage options you might qualify for.

If you’re still having trouble getting a home loan with poor credit, you may need to delay your purchase and spend some time working on your credit score instead. Co-signing with someone is another option, but it may or may not help you depending on your credit. 

A co-signer is someone who agrees to repay your debt if you default on a loan or miss a payment. A co-signer typically will need a good credit history and should be someone with a low DTI. It’s important to note lenders typically look at the lower of the two credit scores when evaluating a mortgage application by two people, so a co-signer may not make much difference.

However, a co-signer may help you get a higher loan amount than you could secure on your own. Just remember, if you and your co-signer are unable to keep making loan payments, it could drop both of your credit scores and may hurt your chances to get financing in the future.

Tip: If you want a clearer picture of what you can afford, pre-approval can help. With Ally Home, you can get pre-approved online in as little as 3 minutes. And if you’re ready to put in a serious offer on a home (with or without a co-signer), consider a Verified Pre-Approval Letter (VPAL). With a VPAL, you can eliminate potential credit score surprises and house hunt with confidence knowing your documents have undergone a thorough financial review by a Home Loan Expert, which includes a hard credit pull.

Credit scores are a measure of financial health, and it’s important to understand what credit score is needed to qualify for a mortgage loan. While it’s possible to qualify for a conventional loan with a minimum 620 credit score, individual mortgage lenders may require a higher score.