Myth Monday: “You Need Perfect Credit to Buy a Home”

“I’d love to buy a house, but my credit isn’t good enough.”

Sometimes that’s coming from someone who has actually talked with a lender.

But a lot of the time?

They’ve decided it on their own.

Maybe their credit score isn’t in the 700s.

Maybe they had a late payment a few years ago.

Maybe they carry some credit card debt.

Maybe they checked a score online and assumed homeownership was automatically off the table.

That assumption could keep someone renting far longer than necessary.

Myth: You need perfect credit to buy a home.
Reality: Perfect credit is not a requirement for every buyer.

There isn’t one universal credit-score requirement that applies to every mortgage, every lender or every borrower.

The better first step is to talk with a knowledgeable lender and find out what options actually fit your financial situation.

Let's Start With the Obvious: Credit DOES Matter

I don't want to swing so far in the other direction that this becomes:

“Credit scores don't matter.”

They absolutely do.

The Consumer Financial Protection Bureau says lenders generally use your credit scores and credit report when determining whether you qualify for a mortgage and what interest rate to offer. Higher scores generally give borrowers access to better rates and more lending choices.

So improving your credit can absolutely be worthwhile.

But:

“Better credit can improve your mortgage options”

is very different from:

“If my credit isn't perfect, I can't buy a house.”

There Is No Single Magic Mortgage Score

This is where homebuyers can get confused.

Ask someone what credit score you need to buy a house and you'll probably hear:

“620.”

Or:

“640.”

Or:

“You really need a 700.”

None of those numbers tells the whole story.

Mortgage programs have different underwriting guidelines.

Lenders can also have their own requirements.

Automated underwriting systems evaluate more than one piece of information.

And a borrower's entire financial profile matters.

Even Fannie Mae's current guidelines illustrate how much the rules can vary.

For loans evaluated through Fannie Mae's Desktop Underwriter, or DU, there is currently no minimum credit score requirement imposed by Fannie Mae. DU evaluates the borrower's overall credit risk.

For manually underwritten Fannie Mae loans, the requirements are different: current guidelines generally call for a minimum 620 score for fixed-rate loans and 640 for adjustable-rate mortgages.

Same broad category of conventional financing.

Different underwriting paths.

Different rules.

That's exactly why a random credit-score number you saw online doesn't tell you whether you can buy a house.

FHA Loans Were Designed With More Flexible Credit Standards

FHA financing is another great example.

HUD specifically addresses the myth that FHA borrowers need perfect credit, noting that FHA-insured mortgages generally have lower minimum credit-score requirements than many conventional mortgages.

Under FHA guidelines, borrowers with a qualifying credit score of at least 580 may be eligible for maximum FHA financing.

Borrowers with qualifying scores between 500 and 579 may still potentially qualify, but financing is generally limited to 90% loan-to-value, meaning a larger down payment would be required.

Below 500, a borrower generally isn't eligible for FHA-insured financing.

Does that mean someone with a 581 score is automatically approved?

No.

That's important.

A lender still evaluates the entire loan file, and individual lenders may apply additional requirements.

But it does show why saying:

“My credit isn't in the 700s, so I can't buy.”

is simply too broad.

VA Loans Are Another Great Example

Eligible Veterans and service members may have another option.

The Department of Veterans Affairs states that VA itself does not require a minimum credit score for a VA-backed home loan.

However, the private lender making the loan may establish its own credit requirements.

That's an important distinction.

The loan program may allow something that one particular lender doesn't.

Which brings us to one of the biggest lessons in this entire Myth Monday:

One lender saying no does not necessarily mean every lender or every loan program will say no.

Your Credit Score Isn't the Only Thing a Lender Looks At

Mortgage approval isn't based on one number floating by itself.

The CFPB notes that lenders may also consider things such as:

• Your credit history

• Existing debts

• Savings

• Assets

• Income

among other factors when evaluating a mortgage application.

Think about two buyers who both have the exact same credit score.

Buyer A might have:

• Stable employment

• Low monthly debt

• Significant savings

• A healthy down payment

• A long history of paying housing expenses on time

Buyer B might have:

• High monthly obligations

• Very little cash available

• Recent late payments

• Several newly opened credit accounts

Same credit score.

Very different financial profiles.

That's why mortgage underwriting looks deeper than the number displayed on a credit-monitoring app.

You Don't Even Have Just One Credit Score

Here's another thing many consumers don't realize:

You don't have one permanent credit score.

The CFPB explains that people can have multiple credit scores depending on the scoring model, the information used and even when the score is calculated.

The score you see through:

• Your bank

• A credit card app

• A free credit-monitoring website

may not necessarily be identical to the score used during mortgage underwriting.

So if you're looking at an app that says 648 and thinking:

“Well, that's it. I can't buy a house.”

you're making a major financial decision based on incomplete information.

Let the lender evaluate the actual mortgage credit profile.

A Lower Score May Affect the Deal Even If You Can Qualify

This is another important distinction.

There's a difference between:

Can I qualify?

and:

What will qualifying cost me?

A lower credit score may affect:

• The interest rate you're offered

• Mortgage insurance costs

• Available loan programs

• Required down payment

• Lender options

• Overall loan pricing

The CFPB notes that borrowers with higher credit scores generally receive more favorable loan pricing and have more lenders to choose from.

So improving your score might still save you meaningful money.

But that becomes a strategy conversation.

Maybe buying now makes sense.

Maybe spending three months improving your credit creates a materially better loan.

Maybe paying down one credit card changes your qualification.

Maybe correcting an error on your credit report helps.

Those are questions a good lender can help you answer.

Don't Assume You Need to Spend a Year “Fixing Your Credit”

I've seen buyers put homeownership off because they assume they need months or even years to get financially ready.

Sometimes they do.

But sometimes the changes needed are surprisingly specific.

A lender might say:

“Pay this balance down.”

“Don't close that account.”

“Don't open anything new.”

“We need two more months of reserves.”

“Let's correct this reporting error.”

“Your score is actually fine for the program we're considering.”

That's much more useful than randomly trying to raise a credit score without understanding what the mortgage underwriter actually needs.

And Please Don't Start Changing Things Before Talking to a Lender

This deserves its own section.

People often try to “clean up” their finances before applying for a mortgage.

And some of the things that seem logical can occasionally work against them.

For example:

• Closing old credit cards

• Opening a new card to increase available credit

• Financing a car

• Moving large amounts of money around

• Paying off certain accounts without understanding how the lender wants them handled

The CFPB specifically recommends avoiding a lot of new credit applications when preparing for a mortgage because opening or applying for multiple accounts can affect your credit profile.

So before you start rearranging everything:

Talk to the lender.

Let them give you a plan.

What If There Are Mistakes on Your Credit Report?

This one is worth checking.

Credit-report errors can happen.

And if incorrect information is lowering your score, it could potentially affect the mortgage rate or terms you're offered.

The CFPB recommends reviewing your credit reports for errors before applying for a mortgage and disputing inaccurate information when necessary.

This is another reason to start the financing conversation before you're ready to tour houses next Saturday.

You want time to address problems if they exist.

What If Your Credit Really Isn't Ready?

Then that's useful information too.

A good lender shouldn't simply say:

“No.”

Ideally, they help you understand:

Why not yet?

Maybe your debt-to-income ratio needs improvement.

Maybe your score needs to rise.

Maybe you need more savings.

Maybe a recent credit event requires more time.

Maybe there is a different loan program worth exploring.

And sometimes the best answer really is:

Let's work on this first and revisit buying later.

That's okay.

Knowing exactly what needs to happen puts you in a much better position than spending another year assuming homeownership is impossible.

Your First Conversation With a Lender Doesn't Commit You to Buying

This is another misconception I want buyers to let go of.

Talking to a lender doesn't mean you have to buy a house.

It means you're gathering information.

You can learn:

• What your credit actually looks like for mortgage purposes

• Which programs you might qualify for

• What price range makes sense

• What down payment might be required

• What your estimated monthly payment could look like

• What changes could improve your options

• Whether buying now or preparing for later makes more sense

That's valuable information whether you purchase next month or next year.

Don't Let Embarrassment Keep You From Asking

Credit can feel personal.

Maybe you've had a divorce.

A medical expense.

A job loss.

A period where money was tight.

Maybe you made some financial decisions you'd handle differently today.

A mortgage professional has seen credit profiles of every kind.

Their job isn't to grade you.

Their job is to determine whether a loan works and, if it doesn't yet, help identify what may need to change.

You don't need to show up with a flawless financial history before you're allowed to ask questions.

Higher Credit Is Still Worth Working Toward

Just because perfect credit isn't required doesn't mean buyers should ignore their scores.

Quite the opposite.

Stronger credit can potentially improve:

• Your interest rate

• Your mortgage options

• Your borrowing costs

• Your negotiating flexibility

• The number of lenders available to you

So if you're six months away from buying, there may be real value in improving your credit during that time.

The key is to do it strategically.

Not because you need some mythical “perfect” score.

Because improving your overall financial profile may make homeownership more affordable.

So What Credit Score DO You Need?

Here's the answer no catchy social-media graphic wants to give you:

It depends.

It depends on:

• Your loan program

• Your lender

• How the loan is underwritten

• Your income

• Your debt

• Your down payment

• Your credit history

• Your overall financial profile

That's why my response when someone tells me:

“My credit probably isn't good enough to buy.”

isn't:

“Yes, it is.”

And it isn't:

“No, it isn't.”

It's:

“Let's find out.”

Final Thoughts

You do not need a perfect financial life before you're allowed to explore homeownership.

You do need to understand your numbers.

Credit matters.

A stronger credit profile can open more doors and potentially save you money.

But there isn't one universal credit score that separates everyone into:

Homeowner or Not a homeowner.

Mortgage programs work differently.

Lenders work differently.

And every buyer's financial picture is different.

Don't disqualify yourself before a qualified lender has even looked at the situation.

You might be ready now.

You might be closer than you think.

Or you might leave the conversation with a clear plan for getting there.

All three are better than guessing.

Not Sure Whether You're Financially Ready to Buy?

If you're thinking about buying in Dallas, Richardson, Plano, Allen, Frisco, Addison or another North Texas community, you don't have to figure everything out before reaching out.

I can help you understand the buying process and connect you with experienced lenders who can walk through your financing options, credit profile and estimated payments with you.

Then, once we know what makes sense financially, we can build a home search around your actual numbers instead of assumptions.

If homeownership is something you're considering, even if you think your credit isn't perfect, reach out.

Let's start with the facts and go from there.

Kelly Reber, REALTOR® | eXp Realty LLC | Texas License #0483312
Licensed since 2000
Dallas | Richardson | Plano | Addison | North Dallas
Dallas native Kelly Reber has been helping buyers, sellers, relocating clients, and investors navigate North Dallas real estate since 2000. She combines deep local knowledge, data-driven strategy, and straightforward advice to help clients make confident real estate decisions.

Learn more: About Me