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Everything You Need to Know About Credit Scores & Buying a Home

There’s so much information you need to know when buying a home that it can make your head spin. But we’re here to make it a little—actually, a lot—easier by breaking down specific topics and details you should know when beginning the home buying journey. Today we’re talking credit scores and what they mean for homebuyers.

What Is a Good Credit Score to Buy a Home?

A “good” credit score when buying a home is dependent on some key factors. One of those factors is the loan type you’re hoping to go with, and another factor is lender type. Since many loan types are insured by government organizations, these orgs set minimum credit scores that lenders are able to accept. Of course, when you work with Ted Bougie and the Best Advantage Mortgage team, we’ll help you decide which loan is best for you based on your credit score and other factors, but here is a quick breakdown of required or suggested credit scores based on loan type.

The suggested credit score minimum for a conventional loan is 620. Conventional loans are not backed by government agencies, but homebuyers are required to meet Fannie Mae and Freddie Mac underwriting guidelines.

VA Loan

Backed by the U.S. Department of Veteran Affairs, VA loans do not have a minimum required credit score. This loan type is for active or retired military members and eligible surviving spouses.


Loans backed by the U.S. Department of Agriculture are for homes in eligible rural areas. There are two types of USDA loans: Direct and Guaranteed. Direct loans are funded by the USDA, and Guaranteed are funded by private banks and insured by the USDA. Typically, for a Direct USDA loan, a minimum credit score of 640 is required, and a Guaranteed USDA loan requires a minimum score of 680.

FHA Loan

If you have a low credit score, you’re can opt for a loan from the Federal Housing Administration. You may qualify for an FHA loan with a credit score as low as 500, but you’ll need to put at least 10% down on the home you’re purchasing. If your credit score is above 580, you’ll be able to put down as little 3.5%.

Do I Need Good Credit To Buy a HUD Home?

For those who aren’t familiar with HUD, it stands for the U.S. Department of Housing and Urban Development. FHA loans are part of HUD, and as we mentioned above, you don’t necessarily have to have a “good” credit score to qualify for this type of loan, but the higher your credit score, the less you’ll have to put down.

Do I Need Good Credit to Buy a Foreclosed Home?

You don’t necessarily need a decent credit score when buying a foreclosed home. Since lenders are usually keen on unloading foreclosed homes quickly, a buyer with an FHA loan commonly qualifies. Of course, the more money you can put down on the purchase, the more attractive you are as a buyer.

Trust Ted Bougie & the BAM Team Through Your Mortgage Loan Process

Whether you’re buying a home with good credit, or have concerns about your credit score, Ted Bougie and the Best Advantage Mortgage team can work with you to find the right mortgage loan for your homebuying situation. Contact us today and learn how our star Minneapolis loan officers can make your mortgage loan application process as clear and easy as possible.

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