Credit scores
Your score affects whether you qualify, which programs are open to you, and what rate you pay.
Which credit score lenders use
- Lenders pull your credit from all three bureaus. Your qualifying score is the middle of the three, not the highest or the average.
- With two borrowers, the lower of the two middle scores is generally the one used for pricing.
- The score you see in a banking or credit card app is usually a different scoring model from the one mortgage lenders use, so the numbers often don't match.
- Shopping around doesn't wreck your score: mortgage credit checks made within a 45-day window are treated as a single inquiry.
Minimum scores depend on the program:
| Loan type | Minimum score |
|---|---|
| Conventional | Since November 2025, Fannie Mae's automated system no longer has a fixed 620 minimum; it weighs the whole file. Manually underwritten loans still need 620 or more, and many lenders keep their own 620 floor. |
| FHA | 580 for the minimum 3.5% down payment; 500 to 579 requires 10% down |
| VA | VA sets no minimum; each lender sets its own |
| USDA | No fixed minimum in the rules; lenders commonly look for 640 for automated approval |
Scoring is also changing. Since fall 2026, lenders may use a newer model, VantageScore 4.0, on conventional loans instead of the classic FICO score. Ask your lender which model they use.
Raising your score before applying
Paying a collection in full may help increase your score. Ask your loan officer about a rapid rescore to reflect the update quickly — proof of payment and a paid-in-full letter are required, so keep all documentation.
No credit score: non-traditional credit
Having no credit score is not the same as having bad credit. It usually means you have paid for things with cash or a debit card and never borrowed, so the credit bureaus have nothing to score. You can still get a mortgage. Lenders build a picture of how you pay from the bills you already have. That record is called non-traditional credit.
What counts
- Housing payments carry the most weight: rent, above all.
- Regular bills you pay yourself: utilities, phone and internet, insurance premiums, childcare, tuition, and similar accounts, depending on the loan type.
- Twelve months in a row. Each account needs a full, recent 12-month history.
- A paper trail. The lender needs proof from someone other than you: a letter from the landlord or company, or 12 months of cancelled checks or bank statements showing the payments. Rent paid in cash with no receipts generally cannot be counted, so pay by check, bank transfer or another method that leaves a record.
How each loan type handles it
| Loan type | With no credit score |
|---|---|
| Conventional | Fannie Mae's automated system has no minimum score. If no one on the loan has any credit history, the loan must be for a home you will live in. The system may be able to judge you from 12 months of your bank account activity alone. If it cannot, you document at least two accounts, one of them housing. If one borrower has credit history and the other does not, the loan is assessed in the usual way. |
| FHA | The loan is reviewed by a person, not the automated system. Expect to document three accounts, at least one of them rent, phone or utilities, and to meet tighter debt-to-income limits than FHA normally allows. |
| VA | VA sets no minimum score and does not treat a lack of credit as a negative. Non-traditional accounts can be used to show how you pay. |
| USDA | Two accounts if one is a verified 12-month rent history, otherwise three. No exceptions to the debt-to-income limits are allowed when non-traditional credit is used. |
What lenders look for in that history
The bar is a clean recent record. On a conventional loan that means no late housing payments in the last 12 months, no more than one payment 30 days late on any other account, and no collections (other than medical) or judgments in the last 24 months.
If your loan is reviewed by hand
When the automated system cannot approve a no-score loan, an underwriter reviews it manually, and the rules tighten. On a conventional loan that means a one-unit home you will live in, a debt-to-income ratio of no more than 36%, four documented accounts, a homeownership education course, and as much as 12 months of payments in savings if you cannot document a housing payment history.
Your rent can help even if you have a score
On conventional loans, the automated system can give credit for on-time rent of at least $300 a month over 12 months, verified from your bank statements. If your score is thin or borderline, tell your loan officer you rent and ask whether your rent history can be included.
Start a year ahead if you can. Put the lease and at least two bills in your own name, pay them from your own bank account, never miss a due date, and keep the statements. Individual lenders can be stricter than the program rules, so if one says no, ask another.
Debt-to-income (DTI)
DTI compares your monthly debt payments with your gross monthly income. It is the main measure of how much loan you can carry.
Front-end vs. back-end DTI
Lenders actually calculate two different debt-to-income ratios, not just one:
- Front-end DTI (housing ratio): your total housing payment — principal, interest, taxes, insurance, HOA dues, and mortgage insurance if applicable — divided by your gross monthly income.
- Back-end DTI (total debt ratio): that same housing payment, plus every other monthly debt you have (credit cards, auto loans, student loans, personal loans), divided by your gross monthly income.
Which one determines approval? In practice, back-end DTI is generally the primary threshold lenders use for the final decision — it's the number most often referenced when someone says "DTI" without specifying which. Front-end DTI still matters as a secondary check on housing affordability specifically, and a couple of programs (like USDA) cap both independently, but back-end is usually what decides whether you're approved.
These caps aren't always fixed, either — FHA's standard back-end limit is 43%, but with strong compensating factors (cash reserves, minimal increase from your current housing payment, higher credit) and approval through an automated underwriting system, that ceiling can reach as high as 56.9%. Conventional loans can similarly stretch beyond their typical 45% guideline with a strong file. A tool showing you a conservative estimate doesn't mean it's your actual limit — ask your loan officer what your specific compensating factors could unlock.
What actually counts toward DTI
One common point of confusion: DTI is calculated using the required minimum monthly payment shown on your credit report for each debt — not whatever amount you personally choose to pay above that minimum. If you pay extra toward a credit card or auto loan each month, that extra amount doesn't reduce your DTI calculation; lenders only count the minimum required payment.
Deferred student loans
If your student loans are currently deferred with no required monthly payment showing on your credit report, that usually doesn't mean they're ignored for qualifying purposes — most programs still count a hypothetical payment, and exactly how it's calculated depends on your loan program:
- FHA: 0.5% of your outstanding balance per month
- VA: if your loans are documented as deferred for at least 12 months past closing, no payment is counted. Otherwise VA uses 5% of your outstanding balance, divided by 12 (about 0.417% monthly), or a lower actual payment if your servicer documents it
- Conventional: varies by investor — Fannie Mae uses 1% of your balance (or a fully amortizing payment from your loan terms), Freddie Mac uses 0.5%. Which one applies depends on which agency your loan is ultimately sold to.
If your credit report or loan statement shows an actual monthly payment above $0, that documented figure is generally used instead of the flat percentage. A documented $0 payment under an income-driven repayment plan counts as $0 only with Fannie Mae; Freddie Mac, FHA and USDA use 0.5% of the balance instead. Ask your loan officer which applies to your situation.
Collections, tax liens & judgments
Owing an old debt, or the IRS, doesn't automatically disqualify you. Ignoring it does.
FHA — charge-offs and collections
Charge-offs and collections don't have to be paid off to qualify for an FHA loan. Non-medical collections totaling $2,000 or more may add a hypothetical monthly debt — 5% of the balance — to your Debt-to-Income (DTI) ratio, unless they're paid in full or on a documented payment plan. Medical collections get more favorable treatment than other types.
Tax debt and tax liens
Owing the IRS doesn't automatically disqualify you. Ignoring it does.
- They won't be on your credit report, but they will be found. Tax liens were removed from credit reports by 2018. Lenders still see them through the title search, public records and your tax transcripts.
- Conventional: you can qualify with an IRS installment agreement if the monthly payment is counted in your debts and you're current on it. If the IRS has recorded a Notice of Federal Tax Lien in the county where you're buying, the taxes must be paid in full by closing. Delinquent taxes with no agreement must also be paid off.
- FHA: borrowers with delinquent federal tax debt are ineligible. A tax lien can stay unpaid if you have a repayment agreement, have made at least three months of scheduled payments on time, and the payment is counted in your debts. You can't pay three months in advance to meet this.
- VA: delinquent federal debt must be brought current or have a satisfactory repayment arrangement.
- USDA: an IRS-approved repayment plan with at least three on-time payments.
State and local tax liens, and unpaid property taxes on a home you own, are treated as liens that generally must be resolved before closing.
Judgments and other liens
Court judgments also no longer appear on credit reports but turn up in the title search. On conventional loans, open judgments and liens must be paid off at or before closing. FHA and USDA can allow a judgment to remain with a written payment agreement and three months of on-time payments; VA generally looks for about twelve.
Every item in this section will surface during the loan. Raised on day one, most have a path. Discovered a week before closing, the same item can end the transaction.
Bankruptcy & foreclosure waiting periods
A rough patch in your credit history doesn't always mean starting over from zero. Here's what actually applies, and for how long.
Bankruptcy & foreclosure waiting periods
Each loan program requires a minimum waiting period after a bankruptcy or foreclosure before you're eligible to apply again — these vary significantly by program and event type.
| Event | Conventional | FHA | VA |
|---|---|---|---|
| Chapter 7 bankruptcy | 4 years from discharge | 2 years from discharge | 2 years from discharge |
| Chapter 13 bankruptcy | 2 years from discharge, or 4 years from dismissal | May qualify during an active plan after 12 on-time payments + court permission; no set wait once discharged, but if the discharge is under 2 years old the loan must be manually underwritten | Similar — may qualify during an active plan with trustee approval + on-time history |
| Foreclosure | 7 years | 3 years | 2 years from deed transfer (extenuating circumstances can reduce to 1 year) |
| Short sale / deed-in-lieu | 4 years | 3 years. Short sale only: no wait if your mortgage and installment debts were all paid on time for the 12 months before the sale | No VA-set waiting period, but late payments on that mortgage are reviewed and many lenders apply their own 2-year wait |
If a bankruptcy and a foreclosure both occurred, the rules differ by program. On conventional loans, if the mortgage was wiped out in the bankruptcy, the bankruptcy clock can apply even if the foreclosure finished later; otherwise the longer wait applies. Ask your loan officer which date your program measures from. Documented extenuating circumstances — events outside your control, such as a serious illness or the death of a wage earner — can sometimes shorten these windows. Divorce and ordinary job loss often don't qualify, especially on FHA. These are waits to become eligible to apply, not a guarantee of approval once the clock clears.
Rules and figures on this page were checked in October 2026 against the Fannie Mae Selling Guide and lender letters, HUD, VA lender training, USDA, myFICO and the CFPB. FHA and VA items should be confirmed against their current handbooks. The "Conventional" column of the waiting-period table follows Fannie Mae. Lending rules change and lenders add their own requirements, so confirm anything important with your loan officer.
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