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

If you are planning to buy a home in San Diego, Riverside or elsewhere in Southern California, you may wonder whether your credit score is high enough.

You do not have to figure that out alone. The useful starting point is to understand which loans may fit your situation, what each would cost, and what the lender needs to see.

Conventional loan credit requirements

Conventional loans are not insured by FHA or guaranteed by VA. Many buyers have heard that a conventional mortgage always requires a 620 score. That is too broad.

Fannie Mae’s Desktop Underwriter, an automated system lenders use to assess applications, no longer requires a fixed minimum credit score. It still reviews the borrower’s creditworthiness.

Fannie Mae’s manually underwritten fixed-rate loans generally retain a minimum of 620. Other products and lenders have their own requirements. A lender may require a score above an agency’s minimum.

So a score below 620 is a reason to ask about your options. It is not a promise that a conventional loan will be available.

FHA credit and down payment requirements

For borrowers with a credit score, FHA’s standard purchase guidelines provide these starting points:

• 580 or higher: potentially eligible for maximum financing, with as little as 3.5% down.
• 500–579: financing is limited to 90% of the property’s adjusted value, meaning at least 10% down.

The adjusted value generally uses the lower of the purchase price or appraised value, with certain adjustments. A low appraisal can increase the cash you need.

These are FHA program rules. The lender can set a higher minimum score, and you still need to meet income, debt, property and other requirements. Your down payment also does not cover every closing cost.

VA credit requirements

VA does not set a minimum credit score for its home loan benefit. Individual lenders may set one and must review your ability to repay.

Eligible borrowers may be able to buy without a down payment. VA loans do not require monthly mortgage insurance, although a funding fee may apply unless you qualify for an exemption.

If you are eligible, ask to compare VA financing with your other available options.

Credit can affect costs as well as approval

A higher credit score can improve the loan pricing available to you. Your down payment, loan type, loan term and lender also matter.

Mortgage insurance is another cost to compare:

• Conventional: with less than 20% down, private mortgage insurance, or PMI, is usually required. Its cost can vary with your score and down payment.
• FHA: mortgage insurance includes an upfront premium and an annual premium collected monthly. Its premium rates are not based on your credit score.
• VA: there is no monthly mortgage insurance. Include any applicable funding fee when comparing costs.

FHA mortgage-insurance costs are separate from the lender’s interest rate and fees. The same insurance rules do not mean every FHA borrower gets the same rate.

No loan type is automatically the least expensive for everyone. Ask for a comparison that includes the full monthly payment, closing costs and how long you expect to keep the loan.

Buying with a 640 credit score

A 640 score may leave you with options, but it cannot tell us whether you qualify or whether buying now fits your budget.

I would also want to understand your income, current debts, savings, price range and the property you are considering.

Then we can compare the options available now and discuss whether working on your credit first could help. Future rates, prices and credit-score changes are uncertain, so any later scenario is an estimate.

What to do before making changes to your credit

Before closing a card, opening a new account or making a large debt payment to prepare for a mortgage, ask how that change could affect your application and the cash you need for closing.

Keep making required payments on time. A mortgage review is not a reason to delay a payment.

Ask the loan officer which credit scores they are using, what the lender requires and what else you need to qualify.

Help with your homebuying options

I help Southern California buyers understand financing and compare options from multiple lenders. We can start with your goals and budget, then discuss what your credit means for the next step.

Call or text 909-581-2564, or schedule a mortgage call. You can also learn about my homebuyer guidance.

About James Taverner

James Taverner is a California mortgage broker focused on helping first-time buyers understand the mortgage process. DRE #01982735 | NMLS #1369773. Broker Associate with Ever Stewart Alvarado, DRE #01346092 / Lunar Home Loans, Company NMLS #1986844. Licensed in California only. Equal Housing Opportunity.

Loan approval, program availability, rates and terms depend on borrower qualifications, the property, lender requirements and market conditions. The lender makes the final approval decision.