How Does Your Credit Score Affect How Much Your Mortgage Payment Will Be?

Are you planning on purchasing a home in Houston? If so, your credit score plays a crucial role in determining your mortgage payment. Your credit score serves as a measure of your creditworthiness, impacting the interest rate you’ll receive from lenders.

A stellar credit score can lead to a lower interest rate, resulting in a lower monthly mortgage payment. However, a poor credit score can result in higher interest rates, greatly increasing your mortgage payment.

In this article, we’ll delve into how your credit score impacts your mortgage payments.

If you need financing for your dream home, contact our mortgage specialists and apply for a conventional home loan in Houston.

Why a High Credit Score Matters

If you’re in the market for FHA loans in Houston, you’ve probably heard that a stellar credit score is crucial for securing the lowest interest rates. Why? Consider a scenario where you lent cash to a friend who consistently failed to repay you on time. You’ll probably hesitate to lend that friend money again in the future. 

Mortgage lenders are no different when it comes to loans. They want to lend money to individuals with a proven track record of timely payments. A high credit score strongly indicates to lenders that you’re a responsible borrower who is likely to repay your loan on time.

What Credit Score Do You Need to Get the Best Mortgage Rate?

A High Score

Regarding credit scores, a score of 670 or higher is considered good. However, most lenders want a minimum score of at least 620 before offering home loans. Besides credit scores, mortgage lenders also consider other factors, such as your credit report, level of debt, and income. 

A Low Score

Even if your score is below 620, you could still qualify for an FHA loan. However, it’s important to note that FHA loans typically have higher interest rates and fees than traditional mortgages.

If you want to know how much home you can afford with an FHA loan, use our FHA mortgage calculator.

How a Stellar Credit Score Can Save You Cash

Let’s explore how a 140-point difference in credit scores can impact your mortgage payments. Suppose you’re applying for a 30-year fixed-rate mortgage of $300,000 with a credit score of 790; you qualify for a 6.158% APR, resulting in a monthly payment of about $1,829 (excluding taxes, insurance, or homeowners association fees)

However, if your FICO score is 650, your APR will be around 7.201%, resulting in a monthly payment of $2,037. While this may appear insignificant, you could pay an extra $74,638 over the life of the loan.

Keep in mind that these are all estimates. Your final cost will vary, but it's still important to be aware that your credit score matter in home financing.


To sum it up, your credit significantly impacts your mortgage payment. A stellar credit score helps you qualify for a loan and secures better interest rates, resulting in lower monthly payments and long-term savings.

If you’re ready to apply for a mortgage, work with loan specialists from Reliance Financial Group.

* Specific loan program availability and requirements may vary. Please get in touch with the mortgage advisor for more information.