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What’s your number? That’s not a pickup line; it’s the digits a mortgage lender will want to know. Credit scores range from 300 to 850, and for most types of mortgage loans, it takes a score of at least 620 to open the door to homeownership. The lowest interest rates usually go to borrowers with scores of 740 and above whose finances are in good order, while a score as low as 500 may qualify some buyers for a home loan, but this is less common.

Why Does a Credit Score Matter?

Just as you need a résumé listing your work history to interview for a job, lenders want to see your borrowing history, through credit reports, and a snapshot of it, expressed as a score on the credit rating scale, to help predict your ability to repay a debt.

A great credit score vs. a bad credit score can translate to money in your pocket: Even a small reduction in interest rate can save a borrower thousands of dollars over time.

Do I Have One Credit Score?

You have many different credit scores based on information collected by Experian, Transunion, and Equifax, the three main credit bureaus, and calculated using scoring models usually designed by FICO® or a competitor, VantageScore®.

To complicate things, there are often multiple versions of each scoring model available from its developer at any given time, but most credit scores fall within the 300 to 850 range.

Mortgage lenders predominantly consider FICO scores. Here are the categories:

•   Exceptional: 800-850

•   Very good: 740-799

•   Good: 670-739

•   Fair: 580-669

•   Poor: 300-579

Here’s how FICO weighs the information:

•   Payment history: 35%

•   Amounts owed: 30%

•   Length of credit history: 15%

•   New credit: 10%

•   Credit mix: 10%

Mortgage lenders will pull an applicant’s credit score from all three credit bureaus. If the scores differ, they will use the middle number when making a decision.

If you’re buying a home with a non-spouse or a marriage partner, each borrower’s credit scores will be pulled. The lender will home in on the middle score for both and use the lower of the final two scores (except for a Fannie Mae loan, when a lender will average the middle credit scores of the applicants).

Recommended: 8 Reasons Why Good Credit Is So Important

A Look at the Numbers

What credit score do you need to buy a house? If you are trying to acquire a conventional mortgage loan (a loan not insured by a government agency) you’ll likely need a credit score of at least 620.

With an FHA loan (backed by the Federal Housing Administration), 580 is the minimum credit score to qualify for the 3.5% down payment advantage. Applicants with a score as low as 500 will have to put down 10%.

Lenders like to see a minimum credit score of 620 for a VA loan.

A score of at least 640 is usually required for a USDA loan.

A first-time homebuyer with good credit will likely qualify for an FHA loan, but a conventional mortgage will probably save them money over time. One reason is that an FHA loan requires upfront and ongoing mortgage insurance that lasts for the life of the loan if the down payment is less than 10%.

Credit Scores Are Just Part of the Pie

Credit scores aren’t the only factor that lenders consider when reviewing a mortgage application. They will also require information on your employment, income, and bank accounts.

A lender facing someone with a lower credit score may increase expectations in other areas like down payment size or income requirements.

Other typical conventional loan requirements a lender will consider include:

Your down payment. Putting 20% down is desirable since it often means you can avoid paying PMI, private mortgage insurance that covers the lender in case of loan default.

Debt-to-income ratio. Your debt-to-income ratio is a percentage that compares your ongoing monthly debts to your monthly gross income.

Most lenders require a DTI of 43% or lower to qualify for a conforming loan. Jumbo Loans may have more strict requirements.

How to Care for Your Credit Scores Before Buying a House

Working to build credit over time before applying for a home loan could save a borrower a lot of money in interest. A lower rate will keep monthly payments lower or even provide the ability to pay back the loan faster.

Working on your credit scores may take weeks or longer, but it can be done. Here are some ideas to try:

1. Pay all of your bills on time. If you haven’t been doing so, it could take up to six months of on-time payments to see a significant change.

2. Check your credit reports. Be sure that your credit history doesn’t show a missed payment in error or include a debt that’s not yours. You can get free credit reports from the three main reporting agencies.

To dispute a credit report, start by contacting the credit bureau whose report shows the error. The bureau has 30 days to investigate and respond.

3. Pay down debt. Installment loans (student loans and auto loans, for instance) affect your DTI ratio, and revolving debt (think: credit cards and lines of credit) plays a starring role in your credit utilization ratio. Credit utilization falls under FICO’s heavily weighted “amounts owed” category. A general rule of thumb is to keep your credit utilization below 30%.

4. Ask to increase the credit limit on one or all of your credit cards. This may improve your credit utilization ratio by showing that you have lots of available credit that you don’t use.

5. Don’t close credit cards once you’ve paid them off. You might want to keep them open by charging a few items to the cards every month (and paying the balance). If you have two credit cards, each has a credit limit of $5,000, and you have a $2,000 balance on each, you currently have a 40% credit utilization ratio. If you were to pay one of the two cards off and keep it open, your credit utilization would drop to 20%.

6. Add to your credit mix. An additional account may help your credit, especially if it is a kind of credit you don’t currently have. If you have only credit cards, you might consider applying for a personal loan.

Recommended: 31 Ways to Save for a House

The Takeaway

What credit score is needed to buy a house? The number depends on the lender and type of loan, but most homebuyers will want to aim for a score of 620 or better. An awesome credit score is not always necessary to buy a house, but it helps in securing a lower interest rate.

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.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility-criteria for more information.

*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.

Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

External Websites: The information and analysis provided through hyperlinks to third-party websites, while believed to be accurate, cannot be guaranteed by SoFi. Links are provided for informational purposes and should not be viewed as an endorsement.

^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.

SOHL-Q424-112

Checks may not be as common as they once were, but there’s one kind of check that remains a gold standard in large financial transactions: a cashier’s check.

Also known as an official check, a cashier’s check is backed by bank funds rather than personal funds. This provides assurance to the recipient that the money is available and ready to go. Due to their security, cashier’s checks are often required for high-value transactions or when certainty of payment is critical. For example, you may need a cashier’s check when making a large purchase or putting a down payment on a home.

To get a cashier’s check, you need to provide the full amount of the check, plus any fee, up front to the bank. This allows the bank to stand behind the check. Read on to learn more about this important financial tool.

What Is a Cashier’s Check?

A cashier’s check is a check that is issued by the bank or credit union, rather than the payer. Unlike a personal check, which is drawn from the check writer’s account, a cashier’s check is drawn from the bank’s own funds.

When you get a cashier’s check, the bank moves the money from your bank account into its own and guarantees the payment to the recipient. This makes cashier’s checks one of the most secure payment methods available, as the recipient can be sure that the check will not bounce due to insufficient funds.

A cashier’s check includes details like the bank’s name, the amount, and the recipient’s name, all printed by the bank, which adds an extra layer of security.

Recommended: A Complete Guide to Ordering Checks

When Do You Need a Cashier’s Check

Cashier’s checks are often used for transactions where immediate availability of funds is required or when the seller wants an extra guarantee that the funds are legitimate. You may need to use a cashier’s check in the following situations:

•  High dollar payments: Due to their security, cashier’s checks are often used when making large transactions such as buying a car, a home, a boat, or fine art. When there is a lot of money at stake, sellers often prefer cashier’s checks because they reduce the risk of bounced checks or fraud.

•  Real estate transactions: Cashier’s checks are commonly requested for down payments or closing costs on homes and other types of property. Even if you’re only entering a rental contract on a home, a landlord or property management company may ask for a cashier’s check to cover the first and last month’s rent.

•  Online marketplace purchases: Cashier’s checks are frequently used for payments between individuals that don’t know each other. For instance, if you are buying a used car from a stranger who listed it online, the seller may request a cashier’s check to make sure they will get paid.

How and Where to Get a Cashier’s Check

Banks and credit unions typically provide cashier’s checks to their customers (and sometimes to non-customers). Here’s how to get a cashier’s check.

•  Visit your bank or credit union: Typically, you need to be a bank account holder to get a cashier’s check at a bank or credit union. However, some institutions offer cashier’s checks to non-account holders if they pay the full check amount in cash up front.

•  Provide the necessary details: To issue a cashier’s check, the bank will request the name of the payee (the recipient of the check) and the exact amount you wish to pay. They may also ask for any information (such as the reason for the check) to print in the memo line. You’ll likely also need to present a government-issued ID, such as a driver’s license or passport.

•  Pay the check amount and (if applicable) fee: The bank will typically withdraw the check’s amount from your checking account, along with any fee they charge for issuing the check (more on that below). If you do not have an account with the issuing bank, you may need to pay in cash or with a debit card.

•  Receive the cashier’s check: Once the bank processes your request, they will print the cashier’s check with the payee’s name and the amount. The teller will then sign the cashier’s check and give it to you.

While you typically need to purchase a cashier’s check in person, some banks (traditional and online) will allow customers to order cashier’s checks through their website or mobile app. In this case, the check is typically mailed directly to the recipient.

How Much Do Cashier’s Checks Cost?

The cost of obtaining a cashier’s check varies by bank or credit union, but fees typically range from $5 to $15. Some institutions may waive this fee for premium account holders or customers who meet certain criteria, such as maintaining a certain minimum balance. Fees may be higher for non-account holders.

Cashier’s Checks and Safety

One of the main reasons people use cashier’s checks is their high level of security. Since the funds are guaranteed by the bank, there is little risk that the check will be returned for insufficient funds. These checks also have some extra features, like watermarks and at least one bank employee signature, that make them harder to counterfeit. In addition, you don’t have to worry about sharing your personal checking account information with the recipient, since the check isn’t drawn from your account.

Despite their safety and reliability, however, cashier’s checks are not immune to fraud. They are sometimes forged and used by criminals to solicit payments from unsuspecting victims. One popular scam (called the “job scam”), for example, is when a person is offered a job and then receives a fake cashier’s check for a too-high amount as prepayment. They are then asked to return the excess payment as a gift card. Later, they learn that the cashier’s check was counterfeit.

These tips can help you avoid cashier’s check scams:

•  Beware of any unexpected windfalls being paid out by a cashier’s check.

•  If you sell items online and get paid by cashier’s check, it’s wise to wait for the check to fully clear before providing any goods.

•  Be cautious of overpayment scams where a cashier’s check is used to pay for something, and you are asked to send the excess funds back.

•  Verify the issuing bank by contacting them directly and ensuring the check is legitimate.

Recommended: How to Verify a Check Before Depositing

How Cashier’s Checks Compare to Certified Checks and Money Orders

Cashier’s checks look similar to other types of secure payments, such as certified checks and money orders. While there are some similarities between all three payment types, there are also distinct differences. Here’s a look at how they compare and why you’d choose one over the other.

Cashier’s Checks vs Certified Checks

A certified check is a personal check that the payer’s bank has confirmed is backed by sufficient funds and bears an authentic signature. Unlike a cashier’s check however, a certified check is drawn from the payer’s funds, not the banks.

Typically, the bank will set aside the funds needed for the check and won’t allow them to be withdrawn for any other reason. This makes a certified check more secure than a personal check. A special stamp and a signature from a bank representative shows that the check has been certified by the bank.

While certified checks offer a higher level of security than personal checks, they do not provide the same guarantee as cashier’s checks because the bank isn’t responsible for covering the funds directly. Cashier’s checks are generally considered more secure and often preferred over certified checks for larger transactions.

Cashier’s Checks vs Money Orders

Like a cashier’s check, money orders are guaranteed funds. You purchase a money order with cash or a cash equivalent (such as a debit card), assuring that it cannot bounce. Unlike cashier’s checks, however, money orders can be purchased at many different locations. This includes banks as well as post offices, grocery stores, drug stores, convenience stores, and check-cashing stores. Also, fees tend to be lower, often between $1 and $5.

Another difference is that money orders have limitations — they are often capped at no more than $1,000, making them less suitable for large transactions like buying a car or making a down payment on a house. Money orders are often used for smaller transactions or for people who don’t have access to traditional banking services.

The Takeaway

While checks have largely been replaced by digital payments, cashier’s checks are still the payment of choice in many large transactions. These checks are backed by, and paid out by, the bank; you supply the bank with the funds in advance. Just keep in mind that some online banks (including SoFi) do not offer cashier’s checks.

Understanding how cashier’s checks work, and how they compare to certified checks and money orders, can help you choose the right payment method for your needs.

FAQ

How can I avoid cashier’s check fraud?

To help reduce the risk that you’ll be a victim of cashier’s check fraud:

•  Only accept cashier’s checks from trusted sources or individuals.

•  Contact the issuing bank directly to verify that the check is legitimate.

•  Avoid transactions with overpayment or refund requests, as these are common scams.

•  If you’re selling something to a stranger, wait for the cashier’s check to fully clear before providing goods or services, as it can take several days for a bank to verify funds.

What happens if a cashier’s check is lost or stolen?

If a cashier’s check is lost or stolen, contact the issuing bank immediately to report the issue. You will need to provide details like the check amount and payee. The bank will likely require you to file a declaration of loss and may impose a waiting period (often 90 days) before reissuing the check. During this time, the bank verifies that the original check has not been cashed. Some banks charge a fee for reissuing a lost or stolen cashier’s check.

Does a cashier’s check have your name on it?

Yes, a cashier’s check typically has your name on it as the purchaser. It will also include the bank’s name, the payee’s name (the person or entity you’re paying), and the exact amount of the check. Your name is included to ensure the recipient knows who issued the payment and allows for easier record-keeping on both sides of the transaction.

Does a cashier’s check come directly out of your account?

When you request a cashier’s check, the bank withdraws the full amount from your account before issuing the check. Once the funds are withdrawn, the check is backed by the bank’s own funds, providing a guarantee to the recipient.

If you do not have an account with the issuing bank, you may need to provide cash or pay with a debit card.

What info is needed for a cashier’s check?

To obtain a cashier’s check, you need to provide the following information:

•  Payee’s name: The person or entity to whom the check will be made payable.

•  Exact amount: The dollar amount you want to transfer.

•  Your identification: A government-issued ID to verify your identity.
In addition, you’ll need to make sure sufficient funds are available in your account (or provide cash) to cover the check amount and any fee.

Photo credit: iStock/TARIK KIZILKAYA

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SoFi members with direct deposit activity can earn 4.00% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.

As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.00% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.

SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.00% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.

SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.

Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.

Interest rates are variable and subject to change at any time. These rates are current as of 12/3/24. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.

*Awards or rankings from NerdWallet are not indicative of future success or results. This award and its ratings are independently determined and awarded by their respective publications.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.