Short answer: 740 or higher gets you the best pricing on a conventional loan, and the gap between "meh" and "great" credit can run three-quarters of a percentage point or more on your rate. That's not a rounding error — on a $350,000 loan, it's roughly $150+ a month for the life of the loan, just because of a three-digit number. You don't need perfect credit to buy a house, but it's worth understanding exactly what your score is buying (or costing) you before you lock a rate.

How credit score actually moves your rate

Conventional lenders (the ones selling loans to Fannie Mae and Freddie Mac) don't quote one rate to everyone who qualifies. They price loans using loan-level price adjustments (LLPAs) — fees baked into your rate based on your credit score, your down payment, your loan type, and a few other risk factors. Lower score, lower down payment, and other risk factors mean bigger LLPAs, meaning either a higher rate or points due at closing to buy the rate back down. It's not personal, it's just risk-based pricing that Fannie and Freddie publish and every conventional lender has to follow (Fannie Mae LLPA Matrix).

The tiers lenders price against are pretty consistent industry-wide: 620, 640, 660, 680, 700, 720, 740, and 760+. Cross from one tier into the next and your pricing improves — sometimes a little, sometimes a lot, depending on where you are in the range.

Here's what that actually looks like using Curinos rate data on a $350,000, 30-year fixed conventional loan, as of August 2026 (Experian, "Average Mortgage Rates by Credit Score," August 2026):

Credit scoreSample 30-year ratevs. 760+
760+6.73%—
740–7596.86%+0.13 pts
720–7396.96%+0.23 pts
700–7197.01%+0.28 pts
680–6997.12%+0.39 pts
660–6797.17%+0.44 pts
640–6597.28%+0.55 pts
6207.46%+0.73 pts

A separate sample pull from myFICO data (via The Mortgage Reports, May 2026) tells the same story with slightly different numbers, which is normal — these are illustrative averages, not a quote you can hold anyone to:. The pattern is the constant, not the exact decimal: 740 is where conventional pricing basically maxes out. Some lenders draw the top tier at 760 or even 780, but the jump from "good" (720s) to "great" (740+) is where most of the meaningful savings live. Above that, you're mostly paying for bragging rights.

620 is also the practical floor for most conventional loans — go below it and you're generally looking at FHA instead, or a much thinner menu of non-QM options.

FHA: the lower-score path

If your score isn't in shooting distance of 620, or you just don't want to grind for two years to get there, FHA loans exist for exactly this situation. FHA-insured loans allow:

  • 580 credit score with 3.5% down
  • 500–579 with 10% down (some FHA lenders don't go this low in practice — it varies by lender's overlays) (FHA.com, Credit Requirements)

The tradeoff: FHA loans carry mortgage insurance premiums (MIP) that are pricier and stickier than conventional PMI — often for the life of the loan unless you refinance out later. It's a real path to homeownership with lower credit, not a free lunch. If your score is borderline (say, high 500s to low 600s), it's worth running the math both ways — FHA now vs. a few months of credit repair and conventional later — rather than assuming one is obviously better.

How your score actually gets pulled

Mortgage lenders don't use the app-based score you check on your phone. They pull a tri-merge credit report — one report combining data from all three bureaus (Equifax, Experian, TransUnion) — and generate a mortgage-specific FICO score from each. Lenders then use the middle of the three scores, not the average and not the highest (Rocket Mortgage, "Tri-Merge Credit Report").

Buying with a partner or co-borrower? The math is a little worse than you'd hope: lenders take the middle score for each person, then use the lower of the two middle scores to price the loan (Chase, "Whose Credit Score Is Used on a Joint Mortgage?"). If your partner's credit is dragging, sometimes the smartest move is applying solo if your income supports it alone — worth a real conversation with a loan officer before you assume joint is always better.

What actually moves the needle before you apply

If you've got a few months before you're ready to apply, this is roughly the order of impact:

  1. Pay down credit card balances, not just the minimum. Utilization — how much of your available credit you're using — is one of the fastest-moving parts of your score. It recalculates every time a balance reports, so paying down cards before your statement closing date (not just the due date) can meaningfully move your score within one to two billing cycles. Aim under 30% utilization on every card, ideally under 10% on the ones that matter most.
  2. Don't open new credit right before or during the mortgage process. A new card or auto loan triggers a hard inquiry and drops your average account age — both dings, and both avoidable. Lenders also re-pull credit close to closing, and a new account showing up mid-process can blow up your approval, not just your score.
  3. Don't close old credit cards either, even ones you don't use. Closing a card lowers your total available credit, which can spike your utilization ratio overnight.
  4. Check your reports for errors before you apply, not after a lender flags a problem. You're entitled to free reports from all three bureaus at AnnualCreditReport.com. If you find something wrong, you can dispute it directly with the bureau in writing, and separately with whoever furnished the bad information (the creditor itself) — furnishers generally have 30 days to investigate (CFPB, "How do I dispute an error on my credit report?"). If time is tight, ask your lender about a rapid rescore — a paid service that can get a corrected balance or dispute reflected in days instead of the normal 30-to-45-day cycle.

None of this requires starting from zero. If you're sitting at 705, closing the gap to 740 is a realistic few-months project, not a five-year one. If you're at 580, FHA gets you in the door now while you work on the rest.

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