Your credit score plays a big role in the homebuying process. It helps lenders determine what types of loans you qualify for, what your interest rate might be, and how much they’re willing to lend.
But many first-time buyers hold themselves back because of a common misconception: the belief that they need perfect credit to buy a home.
The truth is, you don’t need a flawless score to become a homeowner — and understanding how credit actually works can help you take that next step with confidence.
The Myth: You Need Perfect Credit
According to Fannie Mae, only about 32% of potential homebuyers have an accurate idea of the credit score lenders typically require. That means most people either underestimate their eligibility or assume they can’t qualify at all.
In reality, two-thirds of aspiring buyers are overestimating the credit score needed to get approved for a mortgage. This misunderstanding often keeps capable buyers on the sidelines longer than necessary.
The Reality: You Have More Flexibility Than You Think
You don’t need perfect credit to buy a home. Most lenders use credit scores as one piece of a larger financial picture — one that also includes your income, employment history, debt levels, and down payment.
As FICO explains:
“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.”
In other words, lenders look at your overall financial health, not just one number. And because loan programs vary, there are options available even for buyers with lower scores.
For example:
- FHA loans are designed to help first-time buyers and typically accept lower credit scores than conventional loans.
- VA loans (for qualified veterans) and USDA loans (for certain rural areas) also tend to have flexible credit requirements.
The best way to know where you stand is to talk with a trusted local lender who can review your situation and outline the options available to you.
How Your Credit Score Impacts Your Loan
Even though you don’t need perfect credit, your score does affect your loan options and terms. Generally speaking, a higher credit score can help you:
- Qualify for a lower interest rate, which saves you money over the life of the loan.
- Access more loan program options with flexible repayment terms.
- Potentially make a smaller down payment or reduce private mortgage insurance (PMI).
However, buyers with lower scores can still move forward — they may just need to plan for slightly higher rates or a larger down payment.
Simple Steps To Strengthen Your Credit
If you’re preparing to buy and want to improve your score, here are three proven strategies recommended by Experian and Freddie Mac:
1. Pay Bills on Time
Consistent, on-time payments are one of the strongest indicators of financial reliability. Set up automatic payments or reminders to ensure you never miss a due date.
2. Pay Down Existing Debt
Focus on lowering the balances on your credit cards and loans. This improves your credit utilization ratio — the percentage of your available credit you’re using — and signals to lenders that you’re managing debt responsibly.
3. Limit New Credit Applications
Avoid opening new credit cards or taking out loans just before applying for a mortgage. Each inquiry can temporarily lower your score, and too many new accounts may make lenders cautious.
Small, consistent actions over time can make a noticeable difference in your credit profile.
Taking the First Step Toward Homeownership
Your credit score doesn’t have to be perfect to qualify for a home loan. What matters most is understanding where you stand and what steps you can take to strengthen your financial position.
By connecting with a trusted lender early in the process, you can get a clear picture of your options — and often, buyers are surprised to learn they’re closer to homeownership than they thought.
If you’ve been waiting to buy because you think your credit isn’t good enough, it may be time to find out the real story. Your first home might be more attainable than you imagine.