Thinking about buying a $300,000 home? Your credit score will play a big role in whether you’ll get approved for a loan and what your interest rate will be. For most conventional loans, you’ll need a credit score of at least 620. But if your credit score is lower, you may still have some options available to you, including a government-backed loan.
Key Points
• A minimum credit score of 620 is required to purchase a $300,000 house with a conventional loan.
• Federal Housing Administration (FHA) loans require a 3.5% down payment for a credit score of 580 or above.
• A 20% down payment allows the buyer to avoid paying for private mortgage insurance (PMI) and can secure better loan terms.
• Monthly mortgage payments for a $300,000 house with a 10% down payment and 6.50% interest rate, including PMI, taxes, and insurance, would be about $2,357.
• First-time homebuyers can access down payment assistance programs.
What Credit Score Is Recommended to Buy a $300,000 House?
Housing is an important component of the cost of living. However, the price of a home does not directly dictate the credit score that you will need to secure a home loan. That said, it may have an effect on the credit score that lenders prefer to see. The more expensive a house, the more risk the lender is taking on, and the higher the credit score they may prefer.
Your credit score is a three-digit representation of your credit history, including how responsible you have been when paying off debt in the past, and how much debt you’re currently carrying. For most conventional loans, you’ll need a credit score of 620 or more. A conventional loan is the most common type of mortgage loan. It’s not insured by the federal government. Rather it’s backed by private insurers, as are jumbo loans.
Government-backed loans, including Federal Housing Administration (FHA) loans, have lower credit score requirements. FHA loans typically have a minimum credit score requirement of 580 for a loan with a 3.5% down payment. Lower scores aren’t necessarily excluded from the FHA program, but borrowers with a score below 580 will need to make a 10% down payment.
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How Much Down Payment for a $300,000 House?
The amount you’ll need to put down for a $300,000 home will depend on your loan. A conventional mortgage typically requires a 3% down payment if you’re buying your first home, and 5% for those who’ve purchased a home in the past. That’s $9,000 or $15,000 respectively.
However, if you want to avoid paying private mortgage insurance (PMI), you’ll need to make a down payment of at least 20%. That’s $60,000 for a $300,000 home.
As mentioned above, FHA loans require a 3.5% down payment ($10,500 on a $300,000 loan) if your credit score is 580 or above. Below this threshold you’ll need to put down 10%, or $30,000 on a $300,000 home. In general, anyone can apply for an FHA loan if they meet these requirements.
VA loans — which are available to eligible veterans, active-duty service members, surviving spouses, and certain members of the National Guard and Reserves — generally have no down payment requirement.
The higher your down payment, the less risk your lender is taking on, and the easier it may be to secure a loan. Lower risk also means that your lender may be willing to offer you lower interest rates and more favorable loan terms, which can decrease the overall cost of borrowing over time.
First-time homebuyers can
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with as little as 3% down.
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What Is the Monthly Payment for a $300,000 House?
Mortgage payments are often a big part of an individual’s average monthly expenses. That said, the monthly payment on a $300,000 house can vary widely depending on your interest rate, loan term, and the down payment you’ve made. One way to find out what your payments might look like and what size loan you could be approved for is to seek a mortgage preapproval from a lender.
Here is one example so you can see how costs stack up. Say you wish to purchase a $300,000 home with a 10% ($30,000) down payment. The loan amount is $270,000. Let’s assume you take out a 30-year conventional mortgage at a 6.50% interest rate. You’ll be required to pay PMI, since your down payment is less than 20%. Here’s a breakdown of what you’ll owe monthly.
Principal and interest: $1,707
PMI (ranges from 0.5% to 1.5%): $100
Property taxes (vary by location): $300
Homeowners insurance (varies by location and coverage): $250
Total: $2,357 /per month
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How to Afford the Down Payment for a $300,000 House
If you’re a first-time homebuyer, down payment assistance programs (DPAs) offered by state and local government and lenders can help you afford the upfront costs of buying a home. They may come in the form of grants that don’t need to be repaid or various types of loans, such as deferred loans or low-interest loans.
If you don’t qualify as a first-time homebuyer or for DPA, you’ll have to work to save up for a down payment in the months and years leading up to a home purchase. Consider saving this money in a dedicated account, so you aren’t tempted to use it for other purposes.
The Takeaway
There’s no one-size-fits-all credit score requirement to buy a $300,000 house. But a score of 620 or higher will open the door to conventional mortgage options, while those with a lower score might consider applying for an FHA loan. A stronger credit score can help you secure a loan with a lower interest rate and better terms. Ultimately, a higher score can help you save thousands of dollars over the long term by qualifying for a mortgage that better suits your needs.
Looking for an affordable option for a home mortgage loan? SoFi can help: We offer low down payments (as little as 3% - 5%*) with our competitive and flexible home mortgage loans. Plus, applying is extra convenient: It's online, with access to one-on-one help.
FAQ
How much income do you need for a $300,000 mortgage?
It takes a minimum annual income of $90,000 to afford a $300,000 mortgage. This assumes you don’t have to pay for private mortgage insurance and that you don’t have any other significant debts. This is based on the widely used 28%/36% guideline which suggests you spend no more than 28% of your gross income — the amount of money you earn before any deductions, such as taxes — on housing expenses, which includes mortgage payment, property taxes, and insurance.
What is a good down payment for a $300,000 house?
For a conventional mortgage, first-time homebuyers will need to put down at least 3%. Repeat buyers will need to put down 5%. However, you’ll have to pay for private mortgage insurance if you don’t put down at least 20%. The larger your down payment, the easier it may be to qualify for a mortgage or mortgage preapproval and the more likely your lender is to offer lower interest rate and favorable loan terms.
What credit score do I need to buy a $400,000 house?
To buy a $400,000 home, you’ll need a score of at least 620 for conventional and VA loans. And you’ll need a score of 580 for FHA loans with a down payment of 3.5%. If your score is between 500 and 579, you’ll need a 10% deposit to get an FHA loan.
Can I afford a $250,000 house on a $50,000 salary?
If you apply the 28%/36% rule, you would have 28% of your salary to spend on your home expenses (mortgage, taxes, insurance). This means your monthly housing budget is $1,166. The size of your mortgage payments will depend on your down payment, interest rate, and loan term, but it would be difficult to afford a $250,000 house with a budget of $1,166 per month.
Photo credit: iStock/Sean Anthony Eddy
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*SoFi requires Private Mortgage Insurance (PMI) for conforming home loans with a loan-to-value (LTV) ratio greater than 80%. As little as 3% down payments are for qualifying first-time homebuyers only. 5% minimum applies to other borrowers. Other loan types may require different fees or insurance (e.g., VA funding fee, FHA Mortgage Insurance Premiums, etc.). Loan requirements may vary depending on your down payment amount, and minimum down payment varies by loan type.
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¹FHA loans are subject to unique terms and conditions established by FHA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. FHA loans require an Upfront Mortgage Insurance Premium (UFMIP), which may be financed or paid at closing, in addition to monthly Mortgage Insurance Premiums (MIP). Maximum loan amounts vary by county. The minimum FHA mortgage down payment is 3.5% for those who qualify financially for a primary purchase. SoFi is not affiliated with any government agency.
†Veterans, Service members, and members of the National Guard or Reserve may be eligible for a loan guaranteed by the U.S. Department of Veterans Affairs. VA loans are subject to unique terms and conditions established by VA and SoFi. Ask your SoFi loan officer for details about eligibility, documentation, and other requirements. VA loans typically require a one-time funding fee except as may be exempted by VA guidelines. The fee may be financed or paid at closing. The amount of the fee depends on the type of loan, the total amount of the loan, and, depending on loan type, prior use of VA eligibility and down payment amount. The VA funding fee is typically non-refundable. SoFi is not affiliated with any government agency.
Checking Your Rates: To check the rates and terms you may qualify for, SoFi conducts a soft credit pull that will not affect your credit score. However, if you choose a product and continue your application, we will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and may affect your credit.
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