What Credit Score Do I Actually Need for a Conventional Loan in 2025?

If you’re thinking about buying a home or refinancing with a conventional loan, one of the first questions you’ll ask is: “What credit score do I need?”

The quick answer most lenders will give you is 620. But that’s only part of the story, and understanding the full picture could save you thousands of dollars over the life of your loan.

The Minimum Isn’t the Goal

Yes, 620 is typically the minimum credit score for conventional loan approval. But here’s what most people don’t realize: qualifying at 620 and getting approved with favorable terms are two very different things.

At 620, you’ll face higher interest rates, larger down payment requirements, and stricter debt-to-income limits. You might technically qualify, but your monthly payment could be hundreds of dollars higher than someone with a 740 credit score borrowing the same amount.

I’ve seen borrowers get excited about qualifying, only to realize their payment is uncomfortably high because their credit score put them in a higher rate tier.

How Credit Score Tiers Actually Work

Conventional loans use credit score tiers that directly impact your interest rate. Here’s how it typically breaks down:

740+ Score: Best rates and terms. You’ll get the lowest interest rate available and minimal PMI costs if you’re putting down less than 20%. This is the sweet spot where lenders see you as low-risk.

700-739 Score: Good rates, slightly higher than the best tier. You’ll still get competitive terms, but you might pay an extra 0.25% to 0.50% in interest compared to borrowers with 740+.

660-699 Score: Moderate rates with noticeable rate adjustments. You’re paying more for risk, and PMI costs start climbing.

620-659 Score: Higher rates and stricter requirements. You’ll need a larger down payment (often 10-15% minimum), lower debt-to-income ratios, and more cash reserves. Your PMI costs will be significantly higher.

Below 620? You’re generally looking at FHA or other government-backed loan options instead of conventional.

The Middle Credit Score Rule

Here’s something that catches a lot of people off guard: lenders don’t use your highest credit score. They use your middle score.

Every conventional loan application pulls credit from all three major bureaus—Experian, Equifax, and TransUnion. Let’s say your scores come back as 680, 720, and 650. The lender uses 680 (the middle value), not 720.

This matters because you might think you’re in great shape if you check one bureau and see 720, but the lender’s evaluation could be based on a much lower number. If you’re applying with a co-borrower, the lender uses the lower of the two middle scores.

Want to understand exactly how this works for your situation? Check out MiddleCreditScore.com to see how lenders actually evaluate your credit profile.

Small Improvements, Big Savings

Let’s talk real numbers. Moving from a 680 to a 740 credit score on a $400,000 conventional loan could lower your interest rate by 0.50% to 0.75%. Over 30 years, that’s $40,000 to $60,000 in interest savings.

Even a 20-point improvement—say, from 700 to 720—can move you into a better rate tier and save you thousands.

So how do you improve your score before applying?

Pay down revolving debt. Credit utilization (the percentage of available credit you’re using) has a massive impact on your score. If you’re using more than 30% of your credit card limits, paying that down can boost your score quickly.

Dispute errors on all three reports. Don’t just check one bureau—pull all three and look for mistakes. A collections account that shouldn’t be there or an incorrect late payment can drag down your score unnecessarily.

Avoid new credit inquiries. Every time you apply for new credit, it dings your score temporarily. If you’re planning to apply for a mortgage in the next six months, hold off on opening new credit cards or auto loans.

Maintain on-time payments. This one’s obvious, but it’s the foundation of good credit. Set up autopay if you need to—missing even one payment can drop your score by 50-100 points.

When 620 Actually Works

I don’t want to scare you away from applying if your score is in the 620-660 range. There are situations where it makes sense to move forward:

• You have a large down payment (15-20%+) to offset the risk
• You have substantial cash reserves (6+ months of payments)
• Your debt-to-income ratio is very low (under 36%)
• Home prices in your area are rising fast, and waiting means paying more

Sometimes getting into a home now—even with a slightly higher rate—beats waiting two years to improve your credit while prices climb.

The key is understanding the trade-offs and having a plan to refinance once your credit improves. Many borrowers do exactly that: buy now with a 640 score and higher rate, then refinance 12-18 months later when their score hits 740 and they can remove PMI.

First-Time Buyer Considerations

First-time buyers often worry about credit more than they need to. Programs like Fannie Mae’s HomeReady and Freddie Mac’s Home Possible allow 3% down with credit scores as low as 620, and they offer some flexibility on debt-to-income ratios.

If you’re a first-time buyer with a 680+ score, you’re in a strong position. You can access low down payment options without being hit with excessive rate adjustments.

The bigger challenge for first-time buyers is usually saving for down payment and closing costs, not credit scores. If your score is 660+ and you have stable income, you’re likely more ready than you think.

Co-Borrowers and Credit Scores

Applying with a spouse or co-borrower? The lender uses the lower of the two middle scores for pricing.

If you have a 760 score and your spouse has a 640, your loan will be priced at 640. This is frustrating, but it’s standard across the industry.

In some cases, it makes sense to apply solo if one person’s credit is significantly lower, especially if the higher-score applicant has enough income to qualify alone. Run the numbers both ways with a loan officer before deciding.

Your Next Step

Credit scores aren’t magic, and they’re not permanent. If you’re sitting at 650 and want to buy a home, you have options. You can improve your score with focused effort over 6-12 months, or you can explore low-down-payment conventional programs that accept lower scores with compensating factors.

The worst thing you can do is guess. Talk to a licensed loan officer, pull your credit reports from all three bureaus, and create a realistic plan based on your actual numbers—not what you hope they are.

Ready to connect with verified conventional loan officers who can walk you through your specific situation? Visit Browse Lenders to compare options and get transparent guidance without the pressure.