Credit Score To Refinance Your Home: Requirements by Loan Type
Most lenders require a minimum 620 credit score to refinance a home loan, though the requirements vary by loan type — and some have no hard minimum.
- You’ll generally need at least a 620 credit score to refinance your mortgage, unless you’re using a streamline refinance loan.
- You can still refinance with bad credit, but you’ll have more limited options.
- Credit score requirements vary between rate-and-term and cash-out refinance loans.
What credit score do you need to refinance your home?
Generally speaking, the higher your credit score, the better your refinance rate. Getting your credit in shape before refinancing is the best way to ensure competitive rate offers.
Here is a quick summary of minimum credit score requirements by loan type:
| Loan program | Minimum score to refi |
|---|---|
| Conventional rate-and-term refinance | Commonly 620 |
| Conventional cash-out refinance | 640 to 700 |
| FHA rate-and-term refinance | 500 |
| FHA cash-out refinance | 500 |
| FHA streamline (non-credit-qualifying) | No minimum credit score |
| FHA streamline (credit qualifying) | 500 |
| VA rate-and-term refinance | Varies by lender |
| VA cash-out refinance | Varies by lender |
| VA IRRRL | No minimum credit score |
| USDA rate-and-term | No minimum credit score |
| USDA streamlined assist | No minimum credit score |
Below, we provide a breakdown of credit score requirements based on whether you want a rate-and-term refinance (just to change your interest rate, loan term, or both) or a cash-out refinance (to pull out cash from your home’s equity).
Rate-and-term refinance requirements
| Loan type | Minimum credit score |
|---|---|
| Conventional refinance | 620 |
| FHA refinance | 500 to 580 (with one exception: FHA streamline refinances don’t require a credit check) |
| VA refinance | No minimum, but lenders typically require 620 (VA streamline refinances don’t require a credit check) |
| USDA refinance | No minimum, but lenders typically require 640 (USDA streamline refinances don’t require a credit check) |
Cash-out refinance requirements
| Loan type | Minimum credit score |
|---|---|
| Conventional cash-out refinance | 640 to 700 |
| FHA cash-out refinance | 500 to 580 |
| VA cash-out refinance | No minimum, but lenders typically require 620 |
| USDA cash-out refinance | Cash-out refinancing isn’t allowed by the USDA |
The tables above list a range of credit scores as the minimum requirement. That’s because the exact credit score minimum that applies to you depends on other factors.
Common factors that affect whether you can get a refinance loan are debt-to-income (DTI) ratio, loan-to-value (LTV) ratio and number of months of mortgage reserves.
- Your DTI ratio is the percentage of your gross monthly income that goes toward debt payments.
- Your LTV ratio is the percentage of your home’s value being financed by your mortgage.
Next, we’ll cover the full details on how DTI and LTV affect the credit score minimums for each loan type.
Conventional loans
When refinancing a single-family home, the minimum credit score is generally 620. However, depending on your DTI and LTV ratios, you may need a higher score to refinance a conventional loan.
Plus, your lender may require proof of mortgage reserves ranging from two to six months’ worth of mortgage payments if your credit score is between 620 and 700.
| Minimum credit score | LTV ratio | DTI ratio | Mortgage reserves
Mortgage reserves are liquid savings a lender requires you to have left after closing. The number listed below represents how many months of mortgage payments the funds could cover.
|
|---|---|---|---|
| 620 | Less than or equal to 75% | Up to 36% | 2 |
| 660 | Less than or equal to 75% | Up to 45% | 6 |
| 660 | Greater than 75% | Up to 36% | 6 |
| 680 | Less than or equal to 75% | Up to 45% | 0 |
| 680 | Greater than 75% | Up to 36% | 0 |
| 700 | Greater than 75% | Up to 45% | 6 |
| 720 | Greater than 75% | Up to 45% | 0 |
Remember that you’ll also pay for refinance closing costs ranging between 2% and 5% of your loan amount. If your LTV ratio is higher than 80% when you refinance, you may also have to pay for private mortgage insurance (PMI).
FHA loans
| Credit score | LTV ratio maximum | DTI ratio maximum |
|---|---|---|
| 580 or higher | 97.75% | 43% |
| 500 to 579 | 90% | 43% |
Remember: Besides standard FHA closing costs, you’ll pay upfront and annual FHA mortgage insurance premiums.
VA loans
Minimum credit score needed: No minimum, but lenders typically require 620
The VA doesn’t set a minimum credit score for rate-and-term refinances, but lenders often require a minimum 620 score. The VA only offers VA loans to borrowers serving or retired from the military or their surviving spouses.
Eligible VA borrowers can finance up to 100% of their home’s value with a rate-and-term refinance. VA closing costs may include a VA funding fee, but there’s no mortgage insurance requirement.
USDA loans
Minimum credit score needed: No minimum, but lenders typically require 640
The USDA backs refinances for borrowers with current USDA loans. Borrowers can refinance up to 100% of their home’s value and roll closing costs into the loan. A 640 score is the benchmark for a rate-and-term refinance, but lenders may accept lower scores on a case-by-case basis.
Estimate your new monthly payments using LendingTree’s refinance calculator.
A FICO Score is a credit score created by the Fair Isaac Corp. and ranges from 300 to 850. While there are many different credit-scoring models, including the VantageScore, most lenders commonly use FICO Scores. For example, Fannie Mae requires FICO Scores as part of its mortgage underwriting process, in most cases.
Will I be able to refinance my home?
Use our guide below to understand whether you’re more likely to be approved for a home refinance:
| Your credit score | Able to refinance? | Your best loan options | What to expect |
|---|---|---|---|
| Under 500 | Sometimes | Streamline refinances | You won’t have to undergo a credit check for a streamline refinance, but you must be refinancing an FHA, VA or USDA loan. |
| 500-579 | Sometimes | FHA | An FHA loan is likely your only viable loan option, but you’d need a 10% down payment |
| 580-619 | Yes | FHA, some conventional | Eligible for more FHA options; some conventional lenders may consider applications |
| 620-679 | Yes | Conventional, VA, USDA | Meets the minimum for most rate-and-term refinance programs |
| 680-739 | Yes | Most programs | Strong eligibility with more competitive pricing |
| 740+ | Yes | Best pricing | Best pricing and widest lender choice |
See LendingTree’s picks for the best refinance lenders.
Can you refinance with bad credit?
You can refinance with bad credit or no credit, in some cases. If your credit score is on the lower side, here are a few loan programs to look into:
- FHA streamline refinance
- VA interest rate reduction refinance loan (IRRRL)
- USDA streamlined assist refinance
Fannie Mae and Freddie Mac, the two major government-sponsored enterprises, offer refinance programs for borrowers with underwater mortgages. A house is considered “underwater” if the mortgage balance is higher than the home’s value. A high LTV ratio is considered 97.01% or higher. There’s no minimum required credit score to refinance under either program, but you must currently have a Fannie Mae- or Freddie Mac-owned mortgage to qualify.
Important note: Due to low demand, Fannie Mae has temporarily paused their high LTV refinance options.
How to boost your credit score before refinancing
Getting your credit score in shape before you apply for a refinance can increase your approval odds. Here are some steps to help improve your credit score.
1. Keep track of your credit score
It can be challenging to make a plan to fix your credit without understanding your credit score and what’s in your credit report. Knowing your credit score will help you determine if you’re eligible to refinance. It can also identify what improvements you should make to increase it.
Don’t know your credit score? Get your free score on the LendingTree app today.
2. Dispute credit report errors
Review your credit report for accounts you don’t recognize. Dispute inaccurate or false data with any of the three major credit bureaus — Equifax, Experian and TransUnion.
3. Make all payments on time
Your payment history accounts for 35% of your credit score. Making on-time payments on all of your credit accounts is the most important thing you can do to boost your score.
4. Avoid closing accounts
Closing old credit accounts can hurt your credit score. Even if you’re not using old credit cards, keeping those accounts open will help the “length of credit history” component of your score rating, which accounts for 15% of your score.
5. Pay down nonmortgage debt
Your credit utilization ratio — the percentage of the credit you’re using relative to your available credit — also has a big impact (30%) on your credit score. Paying down your credit card balances to below 30% of your available credit can improve your credit score. For installment debts like auto, personal or student loans, make extra payments to shrink your balances sooner.
6. Don’t open any new accounts
Opening a new credit account usually results in a hard inquiry, which can negatively impact your credit score. Plus, applying for new credit too close to refinancing can be a red flag to lenders. Wait until after your mortgage refinance is complete before opening new credit accounts.
Frequently asked questions
Refinancing your mortgage might be worth considering if you’re looking to:
- Lower your interest rate
- Lower your monthly mortgage payments
- Shorten your loan term
- Reduce or get rid of your mortgage insurance
- Switch from an adjustable-rate mortgage to a fixed-rate loan, or vice versa
- Stay in your home for several years
Calculating the break-even point on your refinance can help you figure out if refinancing is the right option for you.
It depends on the loan type and lender. Government-backed loans, like FHA and VA loans, typically have more flexible equity requirements than conventional loans. You’ll generally need at least 20% equity to qualify for a conventional cash-out refinance.
There are several reasons a refinance can be denied, including having bad credit, carrying too much debt, not earning enough income or having insufficient home equity.
You may qualify to refinance your mortgage with a 600 credit score, but your options will be limited. The FHA allows qualified borrowers to refinance with a score as low as 500 and a maximum 90% LTV ratio.
Income requirements for refinancing aren’t one-size-fits-all — they vary depending on the lender and loan type. You should be ready to hand over proof of income documents, including W-2s, bank statements, pay stubs and tax returns.