16 Jul 2021

What Is the Lowest Credit Score to Buy a House?

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Banks that finance home purchases remain conservative in their lending practices. Non-bank lenders, such as Mortgage House, have the freedom to find a healthy compromise for the applicant. Our loan specialists put weight on the applicant’s credit score. The lowest credit score that’s acceptable to receive funding to purchase a home hoovers around 500.

Australian credit scores range from 0 to 1,200 depending on the credit reporting agency. The highest score in Australia is 810. A study shows that the top 20% of borrowers have a score over 700. 

Applicants with a score between 622 and 725 are considered low risk by mortgage lenders. Some lenders will lend to applicants with a credit score of 510 to 621, but it gets tricky.

Credit scores fall because an individual missed some repayments or made several repayments after the due date. This puts the individual in a risky position. The average mortgage in Australia ranges between $300,000 to $500,000. This equals a repayment of $1,250 to $2,180 at 3% monthly for 30 years.

Our Mortgage House online mortgage calculator helps applicants see a funding estimate based on their current financial circumstances. Plus, it’s an opportunity to improve your credit score if it sits below 700.  

Lowest Credit Score Conclusion

Mortgage lenders rely on an applicant’s credit score in their decision-making process. Credit history indicates the homebuyer’s risk level. The lowest credit score to procure financing for a home purchase is 500. There are ways to help this applicant. Mortgage House takes pride in its innovative tools and forward-thinking mindset. For more information, contact our loan specialists. 

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