Credit score to refinance a house
Quick insights
- Mortgage lenders prefer a credit score of at least 620 to refinance, along with other aspects of your credit profile, but requirements vary by lender.
- Borrowers with lower credit scores may still qualify through government-backed refinance programs, such as FHA Streamline or VA IRRRL. These programs often have more flexible credit and documentation requirements.
- Higher credit scores can help you qualify for better loan terms, so improving your credit score before refinancing a mortgage can be worth trying.
There are often several requirements that must be met before a borrower can refinance their home. For example, some mortgages have a set period before you're allowed to apply for refinancing or adjust your mortgage. As with the original loan, there are other qualifications related to the borrower's financial profile, like falling within a certain credit score range. If you’re worried your credit score may impact your ability to refinance, there may be a few ways to still do so.
What credit score is needed to refinance my mortgage?
There’s no one-size-fits-all answer to what credit score you need to refinance because requirements vary by mortgage lender, loan program and refinance type. If you’re asking what credit score you may need to refinance a house, the answer often depends on whether you’re applying for a conventional loan, FHA loan, VA loan, jumbo loan or cash-out refinance. The credit score to refinance a mortgage can vary based on your loan-to-value ratio (LTV), available equity and overall financial profile.
Typical credit score ranges by refinance loan type include:
- Conventional refinance: 620+
- FHA refinance: 580+
- VA refinance: 620+ (but the VA does not set a minimum)
- Jumbo refinance: 700+
- Cash-out refinance: 620+ (though some mortgage providers may require a higher credit score)
In addition to your credit score, mortgage lenders also evaluate other factors that can help support your refinance candidacy, including:
- Home equity, often measured by your LTV ratio.
- The appraised value of your home compared to your remaining mortgage balance.
- Cash or asset reserves (checking account, taxable brokerage accounts, retirement accounts, real estate and valuable personal property).
- Debt-to-income (DTI) ratio (the amount of debt you have relative to your gross income).
- Payment history and mortgage seasoning. Mortgage lenders may look for funds to be in your bank account for 60 to 90 days to prove they are yours and not a recent, undisclosed loan. Also, you must own your home for at least 6 months before doing a cash-out refinance.
While these factors may strengthen your refinance application, they do not guarantee approval if your credit score falls below a loan provider’s minimum.
Credit score for conventional refinance
A conventional refinance generally requires a minimum credit score of 620, although some mortgage lenders may prefer a higher credit score for better pricing or lower closing costs. Borrowers with stronger credit may also qualify for more favorable mortgage interest rates and reduced private mortgage insurance costs, if applicable.
Credit score for FHA refinance
An FHA refinance may allow credit scores as low as 580. This could be an accessible and flexible option for borrowers with fair credit. Some FHA programs may accept lower credit scores depending on compensating factors (strong equity or cash reserves).
Credit score for VA refinance
The Department of Veterans Affairs does not set an official minimum credit score, but approved mortgage lenders may look for 620 or higher for a VA refinance. Certain streamline options, such as the VA Streamline Refinance (IRRRL), may offer more lenient documentation requirements for eligible borrowers.
Credit score for jumbo loan refinance
A jumbo refinance usually comes with stricter qualification standards because the loan amount exceeds conforming loan limits. For example, lenders may require a 700 credit score or higher. Some may look for even stronger credit profiles and larger cash reserves.
Credit score for cash-out refinance
A cash-out refinance typically requires at least a 620 credit score, but mortgage lenders may set higher minimums because you’re borrowing against your home equity and increasing the loan balance. Strong equity and a lower DTI can help improve your chances of getting approved.
Refinancing with low or no credit
People with low credit scores may initially find it difficult to find a refinancing option that works for them. If you find yourself in this situation, speak with your current lender. They may work with you to come up with an action plan or recommend exploring some of the following options.
Conventional conforming refinance
The ability to refinance and keep a conventional loan may be difficult with a lower credit score because conventional loans require good to great credit scores to both borrow and refinance. Speak with your current lender about your options. You may also consider refinancing your conventional loan for an FHA loan if you qualify.
FHA rate-and-term refinance
FHA rate-and-term refinances are often worth investigating if your credit score has taken a hit. These change your loan term and interest rate, which can help you save money. This type of refinancing may allow lower credit scores than conventional mortgages.
FHA streamline refinance
FHA streamline refinances are for people who already hold FHA loans and would like to refinance to lower their interest rate or reduce their loan’s term length with less documentation and fewer costs than a traditional refinance transaction. FHA streamline refinances don’t have a minimum credit score requirement, but they do have requirements related to mortgage repayment history on the loan being refinanced. In some instances, lenders may impose additional credit requirements above and beyond what’s required by the FHA, though this isn’t typical for this particular program.
Overall, refinancing options such as FHA rate-and-term refinances and FHA streamline refinances typically carry lower credit score requirements and offer competitive rates compared to conventional loans. These programs may lower your monthly mortgage payments through lower interest rates or can move your loan from an adjustable to a fixed interest rate. By exploring these options, you may find a refinancing solution that aligns with your financial goals, even with a lower credit score.
How to improve your credit score before refinancing
Before you decide to refinance a mortgage, car loan or personal loan, taking the necessary steps to improve your credit score can help you secure better interest rates, lower monthly payments and more favorable loan terms. Even a modest increase in your credit score can make a sizable difference when mortgage lenders evaluate your application. Here are some tips to help boost your score over time:
- Check your credit reports for errors: Get free copies of your credit reports from the three major credit bureaus, Equifax®, Experian® and TransUnion®, through AnnualCreditReport.comOpens overlay. Carefully review each report for any errors like incorrect balances, accounts that don’t belong to you or outdated information.
- Pay down outstanding debt: Reducing your overall debt, especially high-interest credit card balances, can improve your credit profile. Try to keep your credit card balances low, as high balances can negatively impact your credit score.
- Make payments on time: Payment history is the single largest factor in most credit scoring models. Consistently paying all your bills on time can gradually strengthen your credit history. Your bills could include credit cards, loans and utilities.
- Avoid opening new credit accounts unnecessarily: Each new credit inquiry can temporarily lower your credit score. Limit applications for new credit unless necessary before refinancing.
- Keep older accounts open: The age of your credit accounts contributes to your credit score. Closing older accounts can reduce your average account age and may negatively affect your score.
- Consider a credit-builder loan or secured credit card: If you have limited credit history, using a credit-builder loan or secured credit card responsibly can demonstrate positive credit behavior to mortgage lenders.
- Diversify your credit mix: Having a mix of installment loans (auto or personal loans) and revolving credit (credit cards) can improve your score, but only if you can manage them responsibly.
In summary
The credit score needed to refinance a house depends on the lender and the type of refinance you’re looking to do. If you’re worried about your credit score affecting your eligibility, there are other strategies that are worth investigating. Consider speaking with your current lender to see what options may be available to you.
