Blog Stories What Credit Score Do You Need To Buy A House?

What Credit Score Do You Need To Buy A House?

By Chad Brackett, March 29, 2019

There are many misconceptions about the credit score needed to buy a house. Recently, it was reported that 24% of renters believe they need a 780-800 credit score to be considered for a mortgage. The reality is they are misinformed!

Only 25% of the Americans have a FICO® Score between 740 and 800. Here is the breakdown according to Experian:

  • 16% Very Poor (300-579)
  • 18% Fair (580-669)
  • 21% Good (670-739)
  • 25% Very Good (740-799)
  • 20% Exceptional (800-850)

Randy Hopper, Senior Vice President of Mortgage Lending for Navy Federal Credit Union said,

Just because you have a low credit score doesn’t mean you can’t purchase a home. There are a lot of options out there for consumers with low FICO® scores,”

There are many programs available with low or no credit score requirement. The Federal Housing Administration (FHA) now requires a minimum FICO® score of 580 if you want to qualify for the low down payment advantage. The US Department of Agriculture (USDA) does not set a minimum credit score requirement, but most lenders require a score of at least 640Veterans Affairs (VA) loans have no credit score requirement.

As you can see, none of them is above 700!

It is true that the average FICO® score for all closed loans in January was 726, but there are plenty of people taking advantage of the low credit score requirements. Here is the average FICO® Score of closed FHA Loans since April 2012 according to Ellie Mae:

As you can see, that number has been dropping for the last seven years. As a matter of fact, the average FHA Purchase FICO® Score reported in January 2019 was 675!

One of the challenges is that Americans are unsure about their credit score. They just assume that it is too low to qualify and do not double check. Credit.com confirmed that only 57% of individuals seek out their credit score at least once last year.

FICO® reported,

Since October 2009, the average year-over-year FICO® Score has steadily and consistently increased, from a low of 686 in 2009 to the latest high of 704 as of 2018.”

Here is the increase in the average US FICO® Score over the same period of time as the graph earlier.

Bottom Line

At least 84% of Americans have a score that will allow them to buy a house. If you are unsure what your score is or would like to improve your score in order to become a homeowner, let’s get together to help you set a path to reach your dream!

Chad Brackett

Earth Advantage & ADU Specialist Broker Licensed in OR & WA

Movin' and shakin'... Do you need to buy? Do you need to sell? Is moving in your future? Then let’s talk. Chad Brackett is licensed in Oregon, Washington, and California. Chad's career has afforded him the opportunity to live in 12 different states across the United States while buying and selling more than 12 homes and investment properties, including, most recently, in the Piedmont neighborhood of Portland. Originally from a suburb of Atlanta, Georgia, Chad most recently moved to Portland after spending the past couple of years in the San Francisco Bay Area where he worked for Alain Pinel Realtors. While Chad is relatively new to Portland, he is a Northwestern at heart: “I love everything about Portland. The people, the topography and climate, it is the best place I have live. From the mountains to the coast, there is just so much for my family to do.” Chad has quickly assimilated to the area based on his prior moving experiences. He understands firsthand the challenges with not only buying and selling homes but with moving and relocating. His previous experiences will be an invaluable resource to you throughout your real estate transaction. Chad is committed to quality, integrity, professionalism and excellent service when you enlist his services. Prior to beginning his real estate career, Chad had a successful 30-year retail career in sales and operational support for divisions of large organizations like L'Oreal and Limited Brands amongst others. Chad is extremely detail oriented and will utilize his strategic planning, analysis and innovative approach to ensure that you are completely informed throughout the real estate transaction and achieve your desired goals. He has provided support, training and leadership to thousands of employees and has been responsible for hundreds of millions in annual sales volume. If a commitment to service and being the #1 priority is important to you, then contact Chad.
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  • T: 503-389-0685
  • F: 503-961-8224
  • chadbrackett@livingroomre.com

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