620 is a critical threshold because it unlocks conventional loans, which are the most common mortgage type in America. At 620, you now have access to every major loan program: conventional (as low as 3% down), FHA (3.5% down), VA (0% down), and USDA (0% down). This dramatically increases your options and negotiating power when shopping for the best mortgage terms.

It depends on your situation. FHA loans may offer slightly lower rates at 620 and more flexible debt-to-income ratios. However, conventional loans allow PMI cancellation once you reach 20% equity, while FHA MIP stays for the life of the loan (for most borrowers). If you plan to stay in the home long-term, conventional may save more over time. An NMHL advisor can run a side-by-side comparison for your specific numbers.

You have excellent flexibility: Conventional loans accept as little as 3% down (with PMI). FHA requires 3.5% down. VA offers 0% down for veterans. USDA offers 0% down in eligible areas. On a $300,000 home, your down payment could range from $0 (VA/USDA) to $9,000 (conventional 3%) to $10,500 (FHA 3.5%). Down payment assistance programs may further reduce your upfront costs.

Improving from 620 to 680 can lower your interest rate by 0.5-1.0%, saving approximately $75-$175 per month on a $300,000 loan. Over 30 years, that totals $27,000-$63,000 in interest savings. Additionally, mortgage insurance rates decrease with higher scores. If you are not in a rush, even a few months of credit building can yield significant long-term savings.