Builders’ Dream: Today’s Homebuyers Are More Creditworthy Than Ever

The median FICO score for homebuyers using conventional mortgages has reached a record high of 768, according to Optimal Blue. As resale inventory increases in certain areas of Texas, Florida, and Arizona, creditworthiness measures are expected to normalize. This trend is anticipated as sellers and builders begin to extend their reach into a broader pool of prospective buyers.

According to John Burns,

High-quality buyers dominate today’s market.

The median FICO score for homebuyers using purchase loans hit a record high of 768 in May, as reported by Optimal Blue. This reflects a broader trend of improved financial health among homebuyers.

Factors driving higher homebuyer FICO scores

  • Long-term factors: Over the past decade, improving credit scores have been supported by strong economic growth, rigorous lending standards, and programs designed to help homeowners avoid delinquency. The average FICO score for the typical consumer is ~720, up from ~700 pre-pandemic and ~685 during the depths of the Global Financial Crisis.
  • Short-term factors: Elevated mortgage rates and rising home values have priced out all but the most creditworthy buyers from both the new and resale markets.

Widespread increase in credit scores

Data from Optimal Blue shows that nearly every state has seen a significant increase in purchase loan locks by borrowers with Very Good or Exceptional credit scores (740+), comparing June 2022 to June 2024.

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