Average credit score to buy a house

Your credit score can impact not only your ability to get a mortgage, but also the rate and terms of the loan. Mortgage lenders consider your score, along with other factors such as employment, income, and debt, to determine if you can reasonably afford the home you want. While some mortgage programs open the door to those with lower credit scores, a higher score means you won’t be burdened with higher costs, so the better your score, the lower your mortgage is overall. cheap.

Mortgage and Credit Score Statistics

  • 786 is the median credit score in the United States for those taking out a mortgage, according to second quarter 2021 data from the Federal Reserve Bank of New York.
  • Minnesota, New Hampshire and Vermont are home to those with the highest average credit scores in the nation, while Mississippi, Louisiana and Alabama are home to those with the lowest credit scores, VantageScore reports.
  • The average mortgage debt is $229,242, according to 2021 data from Experian. Gen X borrowers have the highest average mortgage debt at $259,100.

Credit score to buy a house

Certain types of mortgages have specific minimum credit score requirements.

A conventional loan requires a credit score of at least 620, but it is ideal to have a score of 740 or higher, which could allow you to pay a lower down payment, obtain an interest rate more attractive and save on private mortgage insurance.

An FHA loan can be obtained with a credit score as low as 580 or 500, depending on the amount of the down payment. That said, taking out an FHA loan with a very low credit score can still be a challenge, as lenders can impose their own higher credit minimums.

The U.S. Department of Veterans Affairs (VA) does not set minimum credit requirements for VA loans, but many VA lenders have their own credit requirements, typically in the low to mid-600s. do not have a credit score requirement by U.S. Department of Agriculture standards, but you should still be prepared to meet the minimum set by lenders, usually 640.

Type of loan Minimum credit score
Conventional 620
FHA 580
Virginia No requirement, but usually low to medium 600
USDA No requirement, but usually 640

Average Credit Score by State

The credit health of Americans varies from state to state. Minnesota has the highest average credit score, 724, followed by New Hampshire (720) and Vermont (719), according to VantageScore data from December 2021. Mississippi (660), Louisiana (668) and the ‘Alabama (670) have the lowest average scores.

The Northeast and Pacific Northwest tend to have higher credit scores overall, while the Deep South has some of the lowest scores.

Average mortgage debt by age group

Americans typically begin borrowing in early adulthood as they face major expenses like housing and education at a lower income level. They tend to borrow at a slower rate in middle age as incomes rise. As they age, Americans begin to deleverage as they repay their loans.

Generation Average credit score Average mortgage debt
silent generation 729 $163,254
baby boomers 724 $198,203
Generation X 685 $259,100
Millennials 667 $255,527
Generation Z 660 $192,276

Credit Scores and Mortgage Rates

Generally, the higher your credit score, the lower your mortgage rate and the less you will pay monthly and the less interest you will pay. Depending on your credit, a 30-year fixed rate mortgage for $286,400 could cost you:

Credit score APR Monthly mortgage payment Total interest
760-850 3.6% $1,302 $182,358
700-759 3.822% $1,338 $195,313
680-699 3.999% $1,367 $205,775
660-679 4.213% $1,403 $218,579
640-659 4.643% $1,476 $244,810
620-639 5.189% $1,571 $279,055

What else are mortgage lenders considering?

In addition to your credit history and score, mortgage lenders consider your:

  • Work history and income – Lenders want to see that you have a reliable source of income and a paper trail to prove it. Two or more years with the same company is a plus, and be prepared to provide tax returns for the last two years as well.
  • Deposit – A larger down payment can help you get approved and a better interest rate, but be careful not to eat into your emergency savings.
  • Debt-to-income ratio (DTI) – Lenders use your debt-to-income ratio (DTI) as a key measure of an affordable monthly mortgage payment. Too high a DTI ratio could limit your options, even if you have good credit and stable income.
  • Assets – You may be a more attractive borrower overall if you have substantial savings and other assets such as investment or retirement accounts.

At the end of the line

A mortgage is one of the biggest financial commitments you can make and will stick with you for years – even older borrowers still typically carry six-figure debt. In anticipation of the scrutiny of your finances, it is essential to improve or maintain your credit score in order to obtain the best possible rate and conditions.

Learn more: