A good credit score when buying a house is very important but becomes less critical with a big down payment, according to U.S. News and World Report. If a credit score is too low, a home buyer may not even qualify for a conventional loan.
MyFICO points out that the difference between two brackets of credit scores can be thousands of dollars yearly or tens of thousands of dollars for the loan. Generally, the higher a credit score, the lower the mortgage interest rate. Freddie Mac explains that borrowers with credit scores of 770 to 850 qualify for the best mortgage rates. People with credit scores of 650 or below may have issues getting conventional loans and must deal with higher interest rates and down payments.
U.S. News and World Report explains that a higher down payment helps offset a lower credit score because the increased equity in the home means less risk on the lender's side. If a person has a big chunk of savings but a less-than-stellar credit score, applying for a home loan with a credit union or a small bank may get him a better mortgage interest rate than working with a larger bank would. Smaller institutions often have lending rules that allow more leeway.