What Credit Score Do You Need to Buy a House in Texas

What Credit Score Do You Need to Buy a House in Texas?

If you're thinking about buying a home but you're worried about your credit score, you're definitely not alone.

One of the most common questions homebuyers ask me is:

**“What credit score do I need to buy a house?”**

The short answer?

**There isn't one magic credit score required to buy a house in Texas.**

The credit score you'll need depends on the type of mortgage you're using, the rest of your financial profile and, importantly, whether your loan actually receives an approval through underwriting.

That's where some of the information you find online can be a little misleading.

Let's make it make sense.

## What Is the Minimum Credit Score to Buy a House?

You'll see a lot of numbers thrown around online.

620.

621.

622.

And sometimes those numbers are presented as though hitting that particular score automatically means you can qualify for a mortgage.

It doesn't quite work that way.

Different mortgage programs have different guidelines, and individual lenders may also have their own requirements.

Here are some general guidelines:

### Conventional Loans

You'll commonly see **620** listed as a minimum credit score for conventional financing.

However, having a 620 score doesn't automatically mean a conventional loan will be approved.

Your overall credit history, debt-to-income ratio, down payment, reserves and other factors can all play a role.

### FHA Loans

FHA financing can be a great option for buyers who don't have perfect credit.

FHA guidelines may allow a borrower with a credit score of **580 or higher** to qualify for the minimum 3.5% down payment.

There are circumstances where FHA guidelines permit scores below 580 with a larger down payment, although finding financing at those scores can be more challenging because lenders may have additional requirements.

### VA Loans

VA loans are available to eligible veterans, active-duty service members and certain surviving spouses.

One thing that surprises buyers is that the VA itself does **not** establish a universal minimum credit score for its home loan guaranty.

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

That's one reason it's important not to assume you can't use your VA benefit simply because you've been told your credit score isn't high enough somewhere else.

### USDA Loans

USDA loans can provide 100% financing for eligible borrowers purchasing eligible properties.

Credit requirements can depend on the lender and how the loan is evaluated through USDA's underwriting system.

You may frequently see **640** mentioned online in connection with USDA loans, but that doesn't mean every borrower below 640 is automatically disqualified.

## A Minimum Credit Score Does NOT Equal an Approval

This is probably the most important thing I want buyers to understand.

**Meeting a published minimum credit score doesn't necessarily mean you're going to be approved for the loan.**

Mortgage underwriting looks at much more than one number.

Your file may be evaluated through an **Automated Underwriting System**, commonly called AUS.

Depending on the loan program, that system evaluates multiple pieces of your financial picture together.

That can include:

* Your credit history
* Debt-to-income ratio
* Income
* Assets
* Down payment
* Reserves
* Payment history
* Overall loan profile

Two borrowers could have the exact same credit score and receive completely different underwriting results.

That's why I don't like telling someone:

**“You have a 620, so you're good.”**

Maybe you are.

But let's actually look at the entire file first.

## Does Your Credit Score Affect Your Mortgage Rate?

It can.

Your credit isn't only about whether you qualify.

Depending on the loan program and your overall scenario, your credit profile can also affect the interest rate, mortgage insurance or pricing available to you.

That means improving your credit before purchasing could potentially improve more than your ability to get approved.

It could affect the actual cost of your mortgage.

But there's another side to this.

I don't necessarily want someone postponing homeownership for two years because they're trying to reach an arbitrary credit score they saw on the internet.

If your score isn't where you'd like it to be, let's first determine whether you actually need to wait.

## Can I Buy a House With Bad Credit in Texas?

Possibly.

“Bad credit” can mean a lot of different things.

A lower score because of high credit card balances is different from a lower score caused by recent late mortgage payments.

A medical collection is different from a recent repossession.

One late payment two years ago is different from multiple late payments last month.

Your **credit score tells us part of the story.**

Your **credit report tells us much more of it.**

That's why your individual situation matters.

## Should I Pay Off Debt to Raise My Credit Score Before Buying?

Maybe — but please don't start randomly paying things off because an online article told you to.

This is one of those times when doing what seems financially responsible can sometimes produce an unexpected result.

For example, paying down a revolving credit card balance may help your credit utilization.

But paying off and closing certain accounts can affect your credit differently.

And if you're also trying to save money for your down payment and closing costs, we need to look at the entire picture before deciding where your money will help you most.

**Before making major changes to your credit while preparing for a mortgage, talk with a mortgage professional.**

We can look at what is actually affecting your qualification instead of guessing.

## What If My Credit Isn't Ready Yet?

Then we make a plan.

This is one of my favorite things to help buyers with because **“not yet” doesn't necessarily mean “no.”**

Sometimes a buyer needs a few months to pay down certain balances.

Sometimes we need to establish additional credit history.

Sometimes there are errors on a credit report that need to be addressed.

And sometimes the buyer discovers that their credit is already good enough to move forward.

You don't have to get your credit “perfect” before you talk to me.

In fact, I'd rather you talk to me **before** you start trying to fix everything yourself.

That way we can identify what actually matters for your particular situation.

## Getting Ready to Buy Your First Home?

If you're trying to figure out credit, down payments, preapproval and everything else that comes with buying a home, I've created a **free Homebuyer Guide** to help you understand the process.

You can download it from the **Resources page here at ShanaWilliamsMortgage.com.**

It walks you through the homebuying process so you'll have a better idea of what to expect before you ever make an offer.

## Wondering If YOUR Credit Is Good Enough to Buy a House?

Don't disqualify yourself because of a number you saw on an app.

And don't assume you're approved simply because your score crossed a number you found on Google.

Let's look at the actual situation.

Whether you're buying in **Henderson, Longview, Kilgore, Tyler, elsewhere in East Texas or anywhere else in Texas**, I can help you understand your options and determine what your next step should be.

Sometimes that's getting preapproved.

Sometimes it's making a short-term plan so you can become mortgage-ready.

Either way, you'll know where you stand.

**Ready to talk about your options? Schedule a call with me here:**

https://calendar.app.google/ebsVunkmVGhdwiRK6

Making Mortgages Make Sense.

Shana Williams
Mortgage Loan Officer
NMLS #1229825
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