It’s the question on every aspiring homeowners mind, “what credit score do I need to buy a house?” If you’re in the market to buy your first home, this guide has the answers you need to help you land the keys.

Here is the Credit Score You Need to Buy a Home

Although the specific qualifying factors may vary based on state, home price, and available cash flow, the minimum score you need to move forward in any real estate deal is a 580. However, the actual success rate at this number is extremely low.

Generally speaking, when you take into account the current housing market and hefty competition, the more realistic qualifying number is a 640 or higher. As with any large purchase, the higher your score, the better chance you have to close the deal.

To put things into perspective, the average credit score of home buyers in 2017 was a 722. That same year, 70% of home purchase loans were given to those with a 700 FICO score or higher. In addition to good credit, lenders and home sellers also consider the following factors.

Additional Factors Lenders May Consider 

  • ​DTI ratio – your debt-to-income ratio is the amount of money you bring in versus the amount of bills you owe. The target goal here is 30% or less.  However, this number may vary based on your lender.​
  • DTC ratio – your debt-to-credit ratio is the amount of money you currently owe versus the amount of money you can still borrow.​
  • Down payment – in most cases, the minimum you need is 3.5%.​
  • Zero to few derogatory claims listed on your credit report.​
  • A diversified credit history – a solid mixture of loans, credit cards, or other lines of credit in good standing.​
  • A demonstrated ability to borrower and pay back loans.

Here are 3 Ways to Get Ahead While Home Shopping 

Now that you know that base line of home buying, below are 3 tips to get you ahead of the competition while shopping for a new home.

1. Trim the Financial Fat

First, take a look at your current financials. Is there a pattern of unnecessary purchases? What about your debt? Are there better refinancing and/or consolidation options available? Take inventory of your current expenses and trim the financial fat to save where you can.

2. Increase Your Credit Score

Next, when it comes to buying a home, credit is king. 

Step one of score improvement is to fix any errors that may be negatively impacting your credit. This may seem like a minor issue, but it might be more common than you think.  In fact, 79% of credit reports are said to contain at least one error.  Of those, 25% could be severe enough to cause some applicants to be denied credit.  To find out if errors are impacting your score, click here to access your report.  If you spot an inaccuracy, disputing it is your best option for removal. 

Step two of score improvement requires some strategic know-how. Once errors are ideally removed, you’ll want to build as much good credit as possible. Creating a debt payoff plan and learning how to open up the right lines of new credit can help you give your score a bigger boost.

3.) Get Pre-Qualified

Finally, before you spend hours swiping and hearting your favs, it’s a good idea to get pre-qualified. Knowing how much you realistically have to work with is crucial. There’s nothing worse than falling in love with your dream home only to be one up’d by a pre-approved applicant. Put yourself ahead of the game and get pre-qualified before you begin looking. To ensure that you ultimately get the best deal possible, complete steps one and two prior to starting the approval process.

Happy house hunting!