When you’re thinking about buying a house, your credit score can feel like a magic number that determines your future. But what does a 640 credit score really mean for your homebuying journey? Let’s break it down in simple terms so you can plan further with confidence.
What Is a Credit Score and Why Does It Matter for Home Buying?
Your credit score is a three-digit number that gives lenders a quick snapshot of how reliably you’ve managed debt in the past. Think of it as your financial reputation. The most common scoring model, FICO, ranges from 300 to 850. The higher your score, the more likely you are to get approved for a loan with better terms and lower interest rates.
When you apply for a mortgage, lenders look at your credit score alongside other factors like your income, employment history, and debt-to-income ratio. Your score helps them decide if you’re a safe bet for a loan and what kind of interest rate you’ll pay. Generally, a higher credit score means more loan options and lower costs over time.
Where Does a 640 Credit Score Stand?
Let’s put your 640 score in context. As of 2024, the average credit score in the U.S. is around 715. Scores are usually grouped like this:
|
Credit Score Range |
Rating |
|
300–579 |
Poor |
|
580–669 |
Fair |
| 670–739 |
Good |
|
740–799 |
Very Good |
| 800–850 |
Excellent |
A 640 credit score falls into the “fair” category. While it’s below the national average, you’re definitely not alone, as many people buy homes with scores in this range every year.
How Do Lenders View a 640 Credit Score?
If you’re looking at your 640 credit score and wondering what it means for your homebuying dreams, you’re in good company. Lenders see a 640 as “fair”, not quite “good,” but definitely not the bottom of the barrel either. In fact, a 640 is above the minimum required for many popular home loan programs, opening up more doors than you might think.
Comparing 640 to the Average Homebuyer’s Credit Score
To give you some perspective, the average credit score for American consumers is around 717. So, a 640 is a bit below average, but it’s still within reach of many mortgage options. Plenty of first-time buyers and everyday borrowers find themselves in this range, so you’re not alone. Remember, your credit score is just one part of your financial picture and lenders also look at your income, debts, and how much you can put down.
What Are Mortgage Options for a 640 Credit Score
If your credit score is 640, you’ve got more mortgage options than you might think. Let’s see the most common home loan types available to borrowers in this range, so you can see which path might be right for you.
FHA Loans
FHA loans are a favorite among first-time homebuyers, and for good reason. Backed by the Federal Housing Administration, these loans are designed to be flexible and accessible. With a credit score of 640, you’ll likely qualify with a down payment as low as 3.5%. That’s especially helpful if you haven’t been able to set aside a large amount for your down payment yet.
Just keep in mind, FHA loans do require mortgage insurance premiums (both upfront and as part of your monthly payment) but for many buyers, the trade-off is worth it for the easier approval process.
VA Loans
If you’re a military service member, veteran, or part of a qualifying family, VA loans are a fantastic option. The Department of Veterans Affairs backs these loans, and they don’t require a down payment or private mortgage insurance (PMI). While the VA itself doesn’t set a minimum credit score, many lenders are happy to work with scores as low as 580, so your 640 puts you in a strong position. Instead of PMI, you’ll pay a one-time funding fee, which varies depending on your down payment and service history.
USDA Loans
U.S. Department of Agriculture loans are designed for buyers in designated rural areas and come with some great perks, like no down payment required. Most lenders look for a minimum credit score of 640, so you’re right where you need to be for this program. USDA loans also have income limits and require you to buy in an eligible area, but if you qualify, you’ll enjoy competitive rates and low upfront and annual guarantee fees (which work a lot like mortgage insurance).
Conventional Loans
Conventional loans aren’t backed by the government, but they’re still within reach for many buyers with a 640 credit score. You’ll generally need at least a 3% down payment, and if you put down less than 20%, you’ll pay private mortgage insurance until you reach 20% equity.
If your credit score is 640, you’re above the typical minimum requirement of 620, so you’ll have access to a wider range of lenders and potentially better terms than someone with a lower score.
No matter which loan you choose, your credit score is just one piece of the puzzle. Lenders will also look at your income, debts, and down payment.
Want to learn more about how mortgages work and what lenders look for? The Federal Housing Finance Agency offers clear explanations on mortgage loans, credit requirements, and more.
Pros and Cons of Buying a House with a 640 Credit Score
Choosing to buy a home with a 640 credit score comes with both exciting opportunities and a few extra hurdles. Let’s break down the advantages and disadvantages in a way that’s easy to follow, so you can make the best decision for your financial future.
| Advantages | Disadvantages |
| Access to government-backed loans: With a 640 credit score, you can qualify for popular programs like FHA, VA, or USDA loans, which are designed to help buyers with fair credit get into a home. | Higher interest rates: You’ll likely pay more in interest compared to buyers with higher credit scores, which can increase your monthly payment and total loan cost. |
| Opportunity for homeownership and equity building: You don’t have to wait for a perfect score—buying now lets you start building equity and enjoying the benefits of homeownership sooner. | Larger down payments: Some lenders may ask for a bigger down payment to help offset the risk of a lower credit score. |
| Potential to refinance later: If you work on your credit after buying, you could refinance your mortgage down the road to get better rates and terms. | Additional fees: Expect to pay extra costs like private mortgage insurance (PMI) or upfront loan fees, especially if your down payment is less than 20%. |
| Special programs for fair credit: Some lenders even offer programs tailored specifically for borrowers with fair credit, giving you more options. | Fewer loan choices: While you’ll have access to government-backed loans, some conventional lenders may have stricter requirements, limiting your options. |
Lending Palm’s Take
We know that every borrower’s journey is unique. A 640 credit score may not open every door, but it absolutely puts homeownership within reach for many people. The key is to weigh these pros and cons, shop around for the best mortgage, and remember that you can always improve your credit and refinance later.
How to Improve Your Credit Score Before Buying a House
Getting your credit score in shape before you apply for a mortgage is one of the smartest moves you can make. Improving your credit can save you money, open up better loan options, and make your homebuying journey a lot smoother. Here are some practical, easy-to-follow steps you can start right now:
Review Your Credit Report for Mistakes
Start by pulling your free credit reports from all three bureaus (Experian, Equifax, and TransUnion). Look for errors, outdated accounts, or anything that doesn’t look right. If you spot a mistake, dispute it right away—fixing errors can give your score a quick boost.
Make Timely Payments of Your Bills
Your payment history is the single biggest factor in your credit score. Setting up automatic payments or reminders can help you stay on track. Even one late payment can drag your score down, so make it a habit to pay every bill on time.
Tackle Your Debt and Lower Credit Card Balances
High balances on your credit cards can weigh down your score. Try to pay down your balances so you’re using less than 30% of your available credit. This lowers your credit utilization ratio, which lenders love to see.
Keep Old Credit Accounts Open
The longer your credit history, the better your score. If you have old credit cards you’re not using, keep them open and active with an occasional small purchase. Closing old accounts can actually shorten your credit history and lower your score.
Avoid Opening New Credit Accounts
Each time you apply for new credit, your score can take a small hit. Plus, new accounts lower the average age of your credit history. Hold off on applying for new credit cards or loans until after you’ve closed on your home.
Ask for a Credit Limit Increase
If you’ve been managing your credit responsibly, consider asking your credit card company for a higher limit. A higher limit (with the same balance) lowers your credit utilization ratio, which can help your score—just be sure not to rack up more debt.
Build Credit with a Secured or Traditional Credit Card
If you’re new to credit or rebuilding, opening a secured or traditional credit card can help. Use it for small, regular purchases and pay it off in full each month. Over time, this positive activity will help strengthen your credit profile.
Improving your credit score is a journey, not a sprint. Every positive step you take brings you closer to qualifying for a great mortgage and a home you love.
Take Charge of Your Homebuying Journey
Buying a house with a 640 credit score isn’t perfect, but it’s often good enough to get you approved for a variety of home loans, including FHA, VA, USDA, and even some conventional options. While you might pay a bit more in interest or fees, shopping around and working on your credit can help you find better rates and save money over time. Take a close look at your finances, compare lenders, and don’t hesitate to reach out to a mortgage professional for guidance. With the right support and a little preparation, your path to homeownership is absolutely within reach
Related: How to Improve Your Credit Score Fast
FAQ’s About Is 640 a Good Credit Score to Buy a House
Q1. Can I get a mortgage with a 640 credit score?
Ans: Yes, you can get a mortgage with a 640 credit score. While it’s considered “fair,” this score meets the requirements for FHA, VA, USDA, and many conventional loans. However, you may face higher interest rates and stricter loan terms compared to borrowers with higher credit scores.
Q2. What loan types are best for a 640 credit score?
Ans: The best loan types for a 640 credit score include FHA loans, VA loans (if you’re eligible), USDA loans for rural areas, and some conventional loans. FHA loans are especially popular due to their flexible credit requirements and low down payment options.
Q3. Will I need a larger down payment with a lower credit score?
Ans: With a 640 credit score, you may qualify for a down payment as low as 3% on a conventional loan or 3.5% with an FHA loan. However, some lenders might ask for a larger down payment to offset the risk of a lower score.
Q4. Does a lower credit score affect interest rates?
Ans: Yes, a lower credit score like 640 usually means you’ll pay a higher interest rate on your mortgage. Lenders see fair credit as a higher risk, so improving your score before applying can help you secure better rates and save money over time.
Q5. How long does it take to improve a 640 credit score?
Ans: Improving a 640 credit score can take a few months to a year, depending on your financial habits. Making on-time payments, paying down debt, and avoiding new credit inquiries can help raise your score and open up better mortgage options.
Q6. Are there special programs for first-time homebuyers with fair credit?
Ans: Yes, there are programs like FHA, VA, and USDA loans designed to help first-time homebuyers with fair credit scores. These programs often offer lower down payments and more flexible requirements, making homeownership more accessible.
Q7. Can I refinance later if my score improves?
Ans: Absolutely. If you improve your credit score after buying a home, you can refinance your mortgage to get a lower interest rate and better terms. Refinancing can help reduce your monthly payments and save money over the life of your loan.
Q8. What other factors do lenders consider besides credit score?
Ans: Lenders also look at your income, employment history, debt-to-income ratio, down payment amount, and overall financial stability. These factors, along with your credit score, help determine your eligibility and the terms of your mortgage
Meet the expert:
Yasmeen Khan
Yasmeen Khan is a senior writer and editor at LendingPalm. She has more than 4 years of experience in finance and is an expert on personal loans.
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