I’m Michael DiVita — DRE #01372066 | NMLS #241655, DiVita Home Finance (DRE #01818285 | NMLS #323700), Tiburon, CA. I’ve been in California mortgage lending since 2000 and founded DiVita Home Finance in 2007. I’m known as a creative mortgage broker: when a bank says no, I find the lender and the loan structure that can say yes. Call (800) 239-1103.
If your credit score isn’t where you’d like it, homeownership in California can feel out of reach. It usually isn’t. Bad credit doesn’t automatically disqualify you — it changes which programs you can use, what you’ll pay, and sometimes how long you should wait. This guide covers the credit scores each loan type actually requires in 2026, how scores drive your rate, how to raise your score before you apply, and what to do if you’re rebuilding after a bankruptcy or foreclosure.
Minimum Credit Scores by Loan Type (2026)
| Loan type | Minimum score | Notes |
|---|---|---|
| FHA | 580 with 3.5% down; 500–579 with 10% down | Many lenders add their own higher minimum (often 600–620) |
| Conventional (Fannie Mae / Freddie Mac) | Traditionally 620 | Fannie Mae dropped its hard 620 floor for Desktop Underwriter loans in November 2025, but most lenders still require about 620 |
| VA | No VA-set minimum | Lenders commonly require roughly 580–620 |
| USDA | 640 for automated approval | Lower scores possible with manual underwriting |
| Jumbo | Set by each lender | Commonly around 700 or higher, with the best pricing at the top tiers |
| Non-QM (bank statement, DSCR, credit-event programs) | Varies by lender and program | Some go into the high-500s or low-600s with larger down payments and higher rates |
FHA is usually the most forgiving program for low scores. It requires mortgage insurance, which stays for the life of the loan if you put less than 10% down (or 11 years with 10% or more). The 2026 FHA loan limit in California runs from $541,287 in lower-cost counties up to $1,249,125 in high-cost counties. VA loans have no loan limit for veterans with full entitlement and no monthly mortgage insurance.
Which Credit Score Do Mortgage Lenders Use?
Mortgage lenders pull a “tri-merge” report from Equifax, Experian and TransUnion and use your middle score. They’ve traditionally used older “Classic FICO” models, which is why the score in your credit card app often doesn’t match. That’s changing: as of September 2026, FHFA allows every approved lender to use either Classic FICO or VantageScore 4.0 for Fannie Mae and Freddie Mac loans, while FICO 10T is approved but not yet in use. Lenders must use the same scoring model for all borrowers on a loan, and a co-borrower with weaker credit can raise your pricing — sometimes by more than their income helps. See co-borrower strategies.
How Your Score Affects Your Rate
On conventional loans, Fannie Mae and Freddie Mac charge loan-level price adjustments (LLPAs) — upfront fees, as a percentage of the loan, that rise at each lower credit tier and each higher loan-to-value band. Under the current grid, the best pricing is reserved for scores of 780 and above; a score just below a tier cutoff (for example 759 vs. 760) can cost real money. Lenders pass LLPAs through as higher rates or points, and jumbo and non-QM lenders use their own score tiers.
On California loan sizes, the difference adds up. On a $700,000 30-year loan, 7.0% is about $4,657 a month in principal and interest versus about $4,424 at 6.5% — roughly $233 a month, or about $84,000 over 30 years. That’s why raising your score 20–40 points before you apply is often worth the wait.
How to Improve Your Credit Score Before Applying
1. Pay down credit card balances
“Amounts owed,” including how much of your available credit you use, is about 30% of a FICO score. Getting each card under 30% of its limit helps; under 10% helps more. Because card balances report monthly, this can move your score within one or two billing cycles.
2. Pay every bill on time
Payment history is the largest factor, about 35% of a FICO score. A single 30-day late payment can drop a good score significantly. Set up autopay on everything while you’re preparing to buy.
3. Dispute errors
A Federal Trade Commission study found about one in five consumers had an error on at least one credit report. Pull all three free reports at AnnualCreditReport.com and dispute wrong balances, accounts that aren’t yours, or late payments reported in error. Bureaus generally have 30 days to investigate, so start early.
4. Don’t close old accounts
Closing an old card shortens your history and reduces your available credit, which raises utilization.
5. Avoid new credit
A single hard inquiry typically costs fewer than five points and only counts in FICO scores for 12 months (it stays on the report for two years), but new accounts also lower your average account age and add payments to your DTI. Skip new cards, car loans and furniture financing in the months before you apply — and don’t co-sign for anyone.
6. Consider authorized-user status or a secured card
Being added as an authorized user on a family member’s long-standing, low-balance card can help a thin file, though mortgage underwriters may look past accounts that aren’t yours. If you’re building from scratch, a secured card reported to all three bureaus establishes history over 6–12 months.
7. Ask before paying old collections
Paying a collection doesn’t always raise your score, and program rules differ. For a one-unit primary residence, Fannie Mae generally doesn’t require collections to be paid off. FHA generally doesn’t count medical collections, but when other collections total $2,000 or more it requires a payoff, a payment plan, or counting 5% of each balance as a monthly debt. In California (a community property state), a non-borrowing spouse’s collections count toward that $2,000 for FHA. Talk to me before you pay — sometimes that money is better used elsewhere.
8. Use a rapid rescore once you’re in process
If you’re a few points from a better tier, I can request a rapid rescore after you pay down a balance or correct an error. Updated scores usually come back within days, instead of waiting for the next reporting cycle.
How Long Improvements Take
| Action | Typical timeline |
|---|---|
| Paying down card balances | 1–2 billing cycles |
| Correcting errors through disputes | About 30–45 days |
| Rapid rescore (through a lender) | A few business days |
| Building a new credit history | 6–12 months |
| Recovering from recent late payments | Impact fades over 1–2 years of clean history |
What Lenders Look at Besides Your Score
- Down payment: more equity offsets a lower score, especially with non-QM lenders.
- Debt-to-income ratio: see high-DTI options.
- Stable income and employment.
- Cash reserves after closing.
- The story behind the score: a one-time hardship followed by years of clean credit reads very differently from a pattern of late payments.
Rebuilding After Bankruptcy, Foreclosure, or Short Sale
A major credit event delays homeownership; it doesn’t end it. Each program has a waiting period — for example, Fannie Mae generally requires four years after a Chapter 7 discharge and seven years after a foreclosure (shorter with documented extenuating circumstances), while FHA’s waits are typically two years after Chapter 7 and three years after a foreclosure. Some non-QM lenders will lend much sooner, at higher rates and with larger down payments. After the wait, lenders look closely at how you’ve handled credit since. See the full timelines in mortgage after foreclosure or bankruptcy in California.
How I Help Borrowers With Challenged Credit
- Credit review up front — what’s actually holding your score down and what’s worth fixing.
- A path to the next tier — which balances to pay, and whether a rapid rescore makes sense.
- Access to 40+ wholesale lenders — lender overlays on credit vary a lot, and I match your file to the ones that fit.
- Government and non-QM options side by side, so you can see the real cost of buying now versus waiting.
Frequently Asked Questions
What is the minimum credit score to buy a home in California?
FHA allows 580 with 3.5% down, or 500–579 with 10% down, though many lenders set a higher floor. Conventional loans have traditionally required 620; Fannie Mae removed its hard DU minimum in November 2025, but most lenders still use about 620. VA has no VA-set minimum, and lenders commonly want roughly 580–620.
Can I get a mortgage with a 580 credit score?
Yes — usually through FHA with 3.5% down, if you find a lender without a higher overlay. Expect to pay FHA mortgage insurance and a higher rate than borrowers with stronger scores. Some non-QM programs also work in this range with larger down payments.
What credit score gets the best mortgage rate?
On conventional loans, the best loan-level pricing tier under the current Fannie Mae and Freddie Mac grid starts at 780. Pricing worsens at each lower tier and higher loan-to-value band. Jumbo lenders set their own tiers.
How fast can I raise my credit score for a mortgage?
Paying down credit card balances can show up within one or two billing cycles, and correcting errors usually takes about 30 to 45 days. Once you’re working with a lender, a rapid rescore can update your scores within a few business days after a paydown or correction.
Should I pay off collections before applying?
Not always. Paying a collection may not raise your score, and program rules differ: Fannie Mae generally doesn’t require collections to be paid on a one-unit primary residence, while FHA generally excludes medical collections but requires a payoff, payment plan, or 5%-of-balance payment in DTI when other collections total $2,000 or more. Ask your loan officer first.
Does shopping for a mortgage hurt my credit?
Only slightly. Checking your own score is a soft pull. Credit scoring models count multiple mortgage inquiries within a short window — 14 to 45 days depending on the model — as a single inquiry, and one inquiry typically costs fewer than five points.
Related Resources
- First-Time Buyer Credit Score Requirements
- Mortgage After Foreclosure or Bankruptcy
- FHA Loans in California
- VA Loans in California
- Non-QM Mortgages
- Mortgage Application Denied?
- California Mortgage Rates
Official Sources & References
Talk to Michael Directly
DiVita Home Finance | Tiburon, CA | In lending since 2000, founded DiVita Home Finance in 2007. Michael DiVita DRE #01372066 | NMLS #241655. Company DRE #01818285 | NMLS #323700.
💬 Text: (310) 849-9124
