Can You Get a Home Loan with 650 Credit Score Easily

Introduction

When planning to buy a home, one of the first questions that comes to mind is can you get a home loan with a 650 credit score? This question matters because your credit score plays a major role in determining whether you qualify for a mortgage and what kind of interest rate you’ll receive. A score of 650 sits in the fair range on the FICO scale, which means lenders see you as a moderate risk, not poor, but not ideal either. However, getting a home loan with a 650 credit score is absolutely possible if you understand how the lending process works and take a few smart steps before applying.

Key Takeaways 

• A 650 credit score is considered fair, and you can get a home loan, but expect higher interest rates than borrowers with excellent credit.
• FHA loans are the most flexible option; many lenders approve scores as low as 580, making 650 easily eligible.
• Conventional loans may approve 650 scores, but you’ll likely need a larger down payment (10–20%) to offset lender risk.
• Your debt-to-income ratio, job stability, and savings can improve your approval odds even with a mid-range score.
• Improving your score slightly (to 670+) can unlock better rates and save thousands over your loan term.
• Shop around different lenders have different credit score minimums and rate policies.
• Adding a co-borrower with higher credit or choosing first-time buyer programs can also boost your chances.
• Paying down credit cards, correcting credit report errors, and avoiding new debt before applying can make approval easier.

What Does a 650 Credit Score Mean for Borrowers

A 650 credit score is often considered fair or average. It tells lenders that you may have had some late payments or higher debt balances in the past but are generally managing your finances responsibly. This score usually sits just below the “good” range, which starts at 670 according to FICO standards. The difference between 650 and 670 might not seem big, but it can significantly affect your mortgage rate.

With a 650 credit score, you’re unlikely to qualify for the very lowest interest rates available on the market. Still, you’re far from being disqualified altogether. Many conventional lenders, FHA programs, and even some private lenders accept applicants in this range. What truly makes a difference is how the rest of your financial picture looks  including income stability, debt-to-income ratio, employment history, and savings for a down payment.

Can You Get a Home Loan with 650 Credit Score? Yes, and Here’s How

The short answer is yes  you can get a home loan with a 650 credit score if you meet other lending criteria. The type of loan program you choose will make a big difference. For example, government-backed loans such as FHA or VA mortgages tend to be more flexible with credit requirements compared to conventional loans. FHA loans, in particular, are designed for borrowers with lower credit scores or limited savings for down payments.

If you’re aiming for a conventional loan, your 650 score may require you to compensate with a slightly higher down payment or demonstrate strong income stability. Lenders will also examine your credit report closely to see what’s driving your score. If your credit history shows consistent payments over the past year and limited debt, you have a much better chance of approval.

Best Home Loan Options for a 650 Credit Score

FHA Loans The Most Flexible Choice

For most borrowers with a 650 credit score, an FHA loan is the easiest entry point into homeownership. FHA loans are insured by the Federal Housing Administration, which allows lenders to approve applicants with lower credit scores. Typically, a 650 score easily meets FHA requirements, and you may qualify for a down payment as low as 3.5%.

While FHA loans make homeownership more accessible, they do come with mortgage insurance premiums (MIP), which slightly increase your monthly payment. However, many borrowers find this a fair trade-off for the opportunity to buy a home sooner rather than waiting years to improve their credit.

Conventional Loans Still Possible with 650 Score

Conventional loans are not backed by the government, which means lenders set their own rules. With a 650 credit score, you can still qualify for a conventional loan, but you may need to provide a larger down payment, often around 10% to 15%. You’ll also likely face slightly higher interest rates compared to borrowers with excellent credit.

That said, many lenders offer “tiered pricing,” which means that if your credit is close to good (like 650–669), the rate difference may be smaller than expected. Some lenders even consider compensating factors such as long employment history, low DTI, or substantial cash reserves to offer better terms.

VA and USDA Loans Options for Eligible Borrowers

If you’re a veteran, active-duty service member, or part of a qualifying family, a VA loan can be an excellent choice. VA loans often don’t require a down payment and are more flexible about credit scores. Many VA-approved lenders accept applicants with scores around 620–640, meaning your 650 score meets the mark comfortably.

USDA loans, designed for rural and suburban homebuyers, can also be an option if your income fits within the program limits. These loans typically require a minimum credit score around 640, so again, 650 is sufficient to qualify in many cases.

How to Strengthen Your Approval Chances

Even though you can get a home loan with a 650 credit score, it’s smart to take a few steps that make you an even stronger applicant. First, review your credit report for errors. A simple correction  like removing outdated negative accounts or fixing incorrect balances can raise your score quickly.

Second, try to reduce existing debt before applying. Paying down credit card balances below 30% of your limit shows lenders that you manage credit responsibly. Third, avoid opening new credit lines or taking on new loans right before your mortgage application. Lenders view new debt as added risk.

Finally, consider getting pre-approved before house hunting. A pre-approval not only helps you understand what loan amount you qualify for but also signals to sellers that you’re a serious and prepared buyer.

What Interest Rate Can You Expect

Interest rates for borrowers with a 650 credit score will generally be higher than those with excellent credit, but not dramatically so. The difference often depends on market trends and the lender’s own policies. On average, the rate might be 0.5% to 1% higher than what top-tier borrowers receive. Over time, that can add up, but it doesn’t make homeownership unaffordable.

If you want to lower your rate, you can increase your down payment or pay for discount points at closing. Some borrowers also choose to refinance later once their credit improves, allowing them to reduce monthly payments.

Should You Wait or Apply Now

Deciding whether to apply now or wait to improve your credit depends on your personal situation. If your financial position is strong, your income is stable, and you’ve saved enough for a reasonable down payment, applying now can make sense especially if housing prices in your area are rising quickly.

However, if you’re close to pushing your score into the “good” range, it might be worth waiting a few months. Paying off a credit card or settling an old account could raise your score above 670, unlocking better loan options and lower interest rates.

Common Mistakes to Avoid

Many homebuyers with fair credit make the mistake of applying for multiple loans at once. Each hard inquiry can temporarily lower your credit score. Instead, shop around within a short timeframe credit bureaus count multiple mortgage inquiries made within a 45-day window as a single inquiry for scoring purposes.

Another common mistake is underestimating closing costs and other expenses. Lenders not only assess your credit but also your overall financial preparedness. Showing that you have savings for both the down payment and closing costs builds trust and improves approval odds.

Conclusion

So, can you get a home loan with a 650 credit score? Absolutely. A fair credit score doesn’t mean your dream of homeownership has to wait. Many borrowers successfully qualify for FHA, VA, or even conventional loans with a score around 650. The key is to balance your application with other strong financial factors such as steady income, manageable debt, and a solid payment history.

With a little preparation, you can secure a mortgage, start building equity, and improve your financial future. Remember, your credit score is just one part of the bigger picture. Lenders today look for responsible borrowers, not perfect ones.

FAQs

Can you get a home loan with a 650 credit score easily?

Yes, you can get a home loan with a 650 credit score quite easily if you meet other requirements like stable income, low debt, and a reasonable down payment. Many FHA and VA loan programs are designed to help borrowers in this score range qualify for home financing.

What is the minimum credit score needed for a home loan?

The minimum credit score depends on the type of loan. FHA loans usually require at least 580, while most conventional loans need around 620. So with a 650 credit score, you already meet the minimum for most home loan programs.

Will I get a higher interest rate with a 650 credit score?

Yes, interest rates are generally a bit higher for borrowers with a 650 credit score compared to those with excellent credit. However, the difference is often small, especially if you have a strong financial profile, good income, and a solid payment history.

Can I get a conventional loan with a 650 credit score?

Yes, it’s possible to qualify for a conventional home loan with a 650 credit score. You may need to offer a larger down payment or show strong compensating factors like low debt-to-income ratio or consistent employment history.

How can I improve my credit score before applying for a mortgage?

To improve your credit score, pay all bills on time, lower credit card balances below 30% of your limit, and avoid applying for new credit right before your mortgage application. Also, review your credit report for any errors that might be lowering your score.

Is it better to wait and increase my score before applying?

If you’re close to reaching 670 or higher, waiting a few months could be worth it since even a small increase can qualify you for better rates. But if your finances and income are strong, applying now with a 650 credit score is still a good option.

What type of home loan is best for a 650 credit score?

FHA loans are often the best option for a 650 credit score because they have more flexible requirements and allow lower down payments. However, some borrowers may still qualify for conventional or VA loans depending on their overall financial profile.

Can I refinance later if my credit score improves?

Yes, refinancing is a smart option. Once your credit score improves, you can refinance your home loan to get a lower interest rate, reduce your monthly payments, or shorten your loan term.

Do lenders check more than just my credit score?

Absolutely. Lenders also review your income, job history, debt-to-income ratio, and savings. A strong overall financial background can help you qualify even if your credit score isn’t perfect.