Would-be homebuyers aren’t sitting on the sidelines because they don’t want to buy—they’re sitting out because they think they can’t. Often, it’s their credit score that’s holding them back.

According to a Bankrate survey, 42% of Americans believe you need excellent credit to qualify for a mortgage. No wonder, when renters are asked why they haven’t bought a home yet, “my credit isn’t good enough” comes up frequently.

Maybe you feel the same way. You check your score, see it’s not where you want it to be, and assume buying your first home just isn’t realistic right now.

Here’s the truth: you don’t need perfect credit to buy a home.

Where does this myth come from? Part of the confusion is that many current homebuyers do have strong credit. Data from the NY Fed shows the median credit score for all buyers is 775.

But that doesn’t mean a score that high is required. In reality, some recent buyers qualified with scores around 660, and some even lower. While the median is high, there’s a range of scores that lenders will accept (see graph below).

 

Even if your credit score isn’t as high as you’d like, it doesn’t automatically shut the door on homeownership. According to FICO, there’s no single “required” credit score to qualify for a mortgage.

“While many lenders use credit scores like FICO Scores to help them make lending decisions, each lender has its own strategy, including the level of risk it finds acceptable. There is no single ‘cutoff score’ used by all lenders, and there are many additional factors that lenders may use . . .”

The best step? Talk to a trusted lender to see what’s possible for you. Many buyers are purchasing homes with credit scores in the 600s—so maybe you can too.

Bottom Line: Your credit score matters, but it doesn’t have to be perfect.

If credit has been holding you back from buying a home, now might be the time to explore your options. A local lender can help you understand where you stand and what your next steps could be.

Remember: you don’t need to have everything figured out to start the conversation.

 

Message me, and I can help connect you with a trusted lender so you can take the first step toward owning your home!