What Credit Score Do You Need to Buy a House for the First Time?

Buying a home for the first time is an exciting milestone, but your credit score plays a crucial role in securing a mortgage. Lenders use your credit score to determine your loan eligibility, interest rates, and borrowing power.

So, what credit score do you need to buy a house as a first-time homebuyer in Canada? Let’s break it down.

Minimum Credit Score Requirements for First-Time Buyers

Most mortgage programs require a credit score of 680 or higher to qualify for a home loan. This applies to conventional loans from "A" lenders, most "B" lenders, and credit unions. A higher credit score often translates to better interest rates and mortgage terms.

However, if your credit score is lower, you may still be able to secure financing. Here’s what you need to know:

✅ 600+ Credit Score – Some "B" lenders may approve you with as little as a 5% down payment

✅ 680+ Credit Score – Standard approval for "A" lenders and competitive rates

✅ 720+ Credit Score – Access to the best mortgage rates and loan options

A higher credit score gives you more flexibility and greater savings in the long run.

Why Your Credit Score Matters for Mortgage Approval

Your credit score directly impacts:

✔ Mortgage Approval Chances – Lenders use your score to assess risk.

✔ Interest Rates – Higher scores qualify for lower interest rates.

✔ Loan Amount – Strong credit means a larger borrowing capacity.

✔ Down Payment Requirements – Some lenders require bigger down payments for lower credit scores.

For example, on a $500,000 mortgage, a borrower with a 720+ score may get a 2.5% interest rate, while someone with a 620 score could be offered 4% or higher - increasing the overall loan cost significantly.

How to Improve Your Credit Score Before Buying a Home

If your credit score isn’t where you want it to be, consider these steps to boost your score before applying for a mortgage:

✅ Pay Bills on Time – Late payments hurt your credit history.

✅ Reduce Credit Card Balances – Keep utilization below 30% of your limit.

✅ Avoid New Credit Applications – Too many inquiries can lower your score.

✅ Check Your Credit Report – Look for errors and dispute inaccuracies.

✅ Build a Strong Credit History – Use credit responsibly over time.

Even a small increase in your credit score could save you thousands of dollars in interest over the life of your mortgage.

Final Thoughts

If you’re a first-time homebuyer in Greater Toronto Area, your credit score plays a huge role in your mortgage approval, interest rate, and overall home-buying budget. While most lenders require a minimum score of 680, improving your score to 720+ can help you unlock better rates and loan options.

📢 Planning to buy a home soon? Take time to improve your credit score, compare mortgage options, and work with a trusted lender to get the best deal!