Can You Buy a House With Bad Credit?

If your credit isn’t where you’d like it to be, you may be wondering whether homeownership is still possible.

Can you buy a house with bad credit?

Potentially, yes. Having a lower credit score does not automatically mean you cannot qualify for a mortgage.

There is no single credit score that determines whether every borrower can or cannot buy a home. Mortgage qualification depends on the loan program, lender or investor requirements, your overall credit history, income, existing debts, assets, property, and other underwriting factors.

Some mortgage programs may accommodate a wider range of credit profiles than others.

The important thing is to understand your current financial situation, learn which mortgage options may be available, and determine whether buying now—or spending additional time preparing—is appropriate for your circumstances.

MortgageRight works with homebuyers across the United States to evaluate mortgage options based on their individual financial profiles and applicable lending requirements.

Quick Answer: Can You Get a Mortgage With Bad Credit?

It may be possible to qualify for a mortgage with less-than-perfect credit.

Potential options depend on factors including:

• Credit score
• Credit history
• Payment history
• Income
• Employment
• Debt-to-income ratio
• Assets
• Down payment
• Loan program
• Property eligibility
• Applicable lender and investor guidelines

Government-backed mortgage programs such as FHA, VA, and USDA loans may provide options for certain eligible borrowers, while conventional financing may also be available depending on the borrower’s credit profile and other qualifications.

A lower credit score can affect the mortgage programs, pricing, and terms available, so qualification should be evaluated based on your complete financial profile rather than your credit score alone.

What Does “Bad Credit” Mean When Buying a House?

“Bad credit” isn’t a specific mortgage category.

Consumers may use the term to describe:

• A low credit score
• Previous late payments
• High credit card balances
• Collection accounts
• Limited credit history
• Bankruptcy
• Foreclosure
• Other negative information on a credit report

These situations aren’t necessarily treated identically during mortgage underwriting.

For example, a borrower with a lower score because of high credit utilization may have a different financial profile than someone with recent missed mortgage payments.

That’s why lenders generally evaluate more than the score itself.

 

How Does Bad Credit Affect Buying a House?

Credit can affect several aspects of mortgage financing.

Mortgage Eligibility

Different mortgage programs have different credit requirements.

A credit profile that does not meet the requirements of one program may potentially meet the requirements of another.

Mortgage Interest Rates

Credit can influence mortgage pricing.

Depending on the loan program and transaction, borrowers with stronger credit profiles may qualify for more favorable pricing than borrowers with weaker credit profiles.

Mortgage rates also depend on numerous other factors, including market conditions, loan type, property type, loan-to-value ratio, occupancy, and loan term.

Down Payment Requirements

Credit may affect the financing structures available to a borrower.

Certain mortgage programs may require different borrower investments depending on the borrower’s qualifications and program guidelines.

Mortgage Insurance

Credit may also affect the cost of mortgage insurance in certain conventional mortgage scenarios.

Mortgage insurance requirements and pricing vary by program and transaction.

Underwriting

A lower credit score may result in additional underwriting considerations.

The lender may review factors such as:

• Recent payment history
• Collections
• Delinquencies
• Housing payment history
• Bankruptcy or foreclosure history
• Current debts
• Available assets

The specific treatment of these factors varies by loan program and applicable underwriting requirements.

What Credit Score Is Considered Too Low to Buy a House?

There isn’t one universal cutoff applicable to every mortgage.

Different programs establish different requirements, and lenders may maintain standards beyond program minimums.

For example, FHA guidelines provide certain financing possibilities beginning at a 500 qualifying credit score, subject to additional requirements. Conventional financing generally has different credit standards.

VA does not establish one universal minimum credit score for its loan guaranty program, although lenders may establish their own requirements.

USDA qualification also includes an evaluation of creditworthiness and applicable underwriting requirements.

Meeting a program’s minimum standard does not guarantee mortgage approval.

 

Mortgage Options for Buyers With Lower Credit Scores

Several mortgage programs may be worth exploring depending on your individual circumstances.

FHA Loans and Lower Credit Scores

FHA loans are insured by the Federal Housing Administration and can provide financing opportunities for qualified borrowers with a range of credit profiles.

Under FHA guidelines:

• Borrowers with qualifying credit scores of 580 or higher may potentially be eligible for maximum FHA financing.
• Borrowers with qualifying scores between 500 and 579 may potentially be eligible with a higher minimum required investment.

However, FHA’s minimum program standards do not mean every lender will approve financing at those credit levels.

Lenders may establish additional requirements, and borrowers must satisfy other applicable FHA underwriting standards.

These may include requirements involving:

• Income
• Employment
• Debt
• Credit history
• Property
• Required borrower investment
• Mortgage insurance

FHA financing can therefore be an option worth discussing if your credit is less than perfect, but eligibility depends on your complete application.

 

Can You Get a Conventional Loan With Bad Credit?

Conventional loans aren’t insured or guaranteed by a federal government agency.

Many conventional mortgages follow requirements established by Fannie Mae or Freddie Mac.

A credit score around 620 is commonly associated with certain conventional mortgage scenarios, although eligibility and underwriting requirements vary.

Even when a borrower meets a minimum credit requirement, credit may affect:

• Interest rate
• Loan-level pricing
• Private mortgage insurance
• Available loan structures

Borrowers shouldn’t assume that conventional financing is automatically unavailable simply because their credit isn’t excellent.

A mortgage professional can compare potential options based on the complete financial profile.

Can You Get a VA Loan With Bad Credit?

Eligible veterans, active-duty service members, and certain surviving spouses may be able to use VA home loan benefits.

The Department of Veterans Affairs does not establish a universal minimum credit score for the VA home loan guaranty program.

However, individual lenders may establish their own credit standards.

VA underwriting also considers other factors, including:

• Credit history
• Income
• Residual income
• Existing obligations
• VA eligibility
• Property requirements

A lower score does not necessarily eliminate VA financing as a potential option for an otherwise eligible borrower.

 

Can You Get a USDA Loan With Bad Credit?

USDA home loans may provide financing opportunities for eligible borrowers purchasing eligible properties.

USDA qualification includes considerations involving:

• Household income
• Property location and eligibility
• Primary residence requirements
• Repayment ability
• Creditworthiness

Automated and manual underwriting requirements may differ, and lenders may have additional requirements.

Because USDA eligibility involves both the borrower and the property, prospective buyers should confirm eligibility rather than assuming a particular property or credit profile qualifies.

Can You Buy a House With a 500 Credit Score?

Potentially, but options may be limited.

FHA guidelines include provisions that may allow certain borrowers with qualifying credit scores between 500 and 579 to obtain FHA-insured financing with a higher minimum required investment.

However:

A 500 credit score does not guarantee FHA loan approval.

The borrower must satisfy all applicable requirements, and individual lenders may establish credit standards above FHA’s minimum.

Can You Buy a House With a 550 Credit Score?

Potentially.

A score around 550 falls within the FHA guideline range where certain financing may be possible with additional borrower investment, subject to all applicable requirements.

However, lender requirements vary considerably.

If your score is around this range, a mortgage professional can help determine whether an available program may fit your circumstances or whether additional credit preparation may provide more options.

Can You Buy a House With a 580 Credit Score?

Potentially.

A 580 qualifying credit score is significant because FHA guidelines generally allow maximum financing beginning at this level, subject to applicable requirements.

But the score alone doesn’t determine approval.

Underwriting will consider the complete application.

Can You Buy a House With a 600 Credit Score?

A 600 credit score may provide potential mortgage options depending on your overall financial circumstances.

FHA financing may be one possibility, and other programs may be available depending on eligibility and lender requirements.

Rather than assuming you cannot qualify because your score begins with a “6,” consider having your complete financial profile evaluated.

Can You Buy a House With a 620 Credit Score?

A score around 620 may potentially expand available mortgage options, including certain conventional financing scenarios.

However, credit is only one component of mortgage qualification.

Your:

• Income
• Debts
• Assets
• Down payment
• Credit history
• Property
• Loan program

may all affect the final outcome.

Credit Score Isn’t the Only Thing Mortgage Lenders Consider

This is one of the most important concepts for prospective buyers with credit concerns.

Mortgage qualification involves your complete financial profile.

Debt-to-Income Ratio

Your debt-to-income ratio, or DTI, compares certain monthly debt obligations with qualifying gross monthly income.

Existing obligations may include:

• Auto loans
• Student loans
• Credit card minimum payments
• Personal loans
• Other applicable debts

DTI requirements vary depending on the loan program, underwriting findings, and borrower profile.

 

Income

Lenders generally verify qualifying income to determine whether it satisfies applicable mortgage requirements.

Depending on your situation, documentation could include:

• Pay stubs
• W-2 forms
• Tax returns
• Bank statements
• Other applicable documentation

Employment

Lenders may evaluate employment and income history as part of the underwriting process.

Requirements can differ for borrowers receiving:

• Salary
• Hourly wages
• Overtime
• Bonuses
• Commission
• Self-employment income
• Other eligible income

 

Assets

Assets may be evaluated to verify funds needed for:

• Down payment
• Closing costs
• Reserves, when required

Payment History

The information behind your credit score matters.

Lenders may review whether negative credit events are:

• Recent
• Isolated
• Recurring
• Resolved
• Still outstanding

Program-specific underwriting requirements determine how particular credit events are treated.

Can You Get a Mortgage After Late Payments?

Potentially.

A history of late payments does not automatically mean you can never obtain a mortgage.

However, recent late payments may receive more scrutiny than older issues, particularly depending on the type and severity of the delinquency.

The impact depends on:

• How recently the late payment occurred
• Number of late payments
• Type of account
• Overall credit history
• Mortgage program
• Applicable underwriting requirements

Can You Buy a House With Collections on Your Credit?

Potentially.

Collection accounts don’t necessarily have identical treatment across every mortgage program.

Factors can include:

• Type of collection
• Amount
• Age
• Whether it has been resolved
• Applicable loan guidelines

Do not automatically pay or settle collection accounts solely because you believe doing so is required for a mortgage.

Changing a credit account may have consequences for your finances or credit profile.

If you’re preparing for mortgage financing, discuss the situation with your loan professional and, when appropriate, a qualified credit or financial professional before taking action.

Can You Buy a House After Bankruptcy?

Bankruptcy does not necessarily prevent someone from eventually qualifying for a mortgage.

However, loan programs may establish waiting periods and additional requirements based on factors such as:

• Type of bankruptcy
• Discharge or dismissal date
• Circumstances
• Credit established afterward
• Mortgage program

Because bankruptcy involves legal and financial considerations, borrowers should obtain appropriate professional guidance regarding their individual circumstances.

Can You Buy a House After Foreclosure?

Potentially, after applicable requirements are satisfied.

Different mortgage programs may establish different waiting periods and eligibility standards following a foreclosure or similar housing-related credit event.

The appropriate timeline depends on the individual situation and loan program.

What If You Have No Credit Score?

Having limited credit history isn’t necessarily the same as having bad credit.

Some borrowers may have:

• Few traditional credit accounts
• No active credit cards
• Limited borrowing history
• No conventional credit score

Certain mortgage programs may provide methods for evaluating borrowers with limited traditional credit, subject to program and lender requirements.

If you don’t have a traditional credit score, speak with a mortgage professional before assuming homeownership is unavailable.

How to Improve Your Chances of Buying a House With Bad Credit

If your current credit profile is limiting your mortgage options, there are several areas you can consider working on.

1. Review Your Credit Reports

Before applying, review your credit reports for accuracy.

Look for:

• Accounts you don’t recognize
• Incorrect balances
• Incorrect payment histories
• Duplicate accounts
• Outdated information

Consumers can obtain their credit reports through the federally authorized AnnualCreditReport.com.

If you discover inaccurate information, follow the appropriate credit-report dispute process.

2. Make Payments on Time

Payment history is an important component of many credit scoring models.

Consistently making required payments on time may help build a stronger credit profile over time.

Consider using:

• Automatic payments
• Calendar reminders
• Banking alerts

3. Reduce Revolving Credit Balances

Credit utilization—the relationship between revolving balances and available credit—can influence credit scores.

Reducing credit card balances may improve utilization and can also reduce monthly debt obligations.

Both may be relevant when preparing for mortgage qualification.

4. Avoid Unnecessary New Debt

If you’re preparing to purchase a home, think carefully before opening new credit accounts or taking on significant additional debt.

Examples include:

• Auto loans
• Personal loans
• New credit cards
• Large financed purchases

Additional debt may affect both your credit profile and debt-to-income ratio.

5. Build Savings

Having additional savings may help prepare you for expenses associated with purchasing and owning a home.

Potential costs include:

• Down payment
• Closing costs
• Moving
• Repairs
• Maintenance
• Emergency expenses

Some mortgage programs may also have reserve requirements depending on the transaction.

6. Don’t Try to “Fix” Your Credit Overnight

Be cautious of companies promising to quickly create a specific credit score or guarantee mortgage approval.

Legitimate negative information generally cannot simply be removed from a credit report because someone wants a higher score.

Focus instead on:

• Accurate credit reporting
• Responsible debt management
• Consistent payment history
• Long-term financial habits

7. Talk to a Loan Officer Before Assuming You Can’t Qualify

One of the biggest mistakes prospective buyers can make is deciding they cannot qualify without actually reviewing their situation.

A lower credit score doesn’t tell the entire story.

A mortgage professional may be able to explain:

• Programs that may be available
• Areas affecting qualification
• Documentation that may be needed
• Whether additional preparation could improve available options

Starting the conversation doesn’t obligate you to purchase a home immediately.

Should You Buy a House Now or Wait to Improve Your Credit?

This depends on your individual financial circumstances.

Buying immediately isn’t necessarily better than waiting, and waiting isn’t automatically better than buying.

Consider:

Your Available Mortgage Options

Would improving your credit potentially provide access to additional financing options or different pricing?

Your Monthly Budget

Would the potential housing payment comfortably fit your budget?

Your Savings

Would buying leave you with appropriate funds for emergencies and homeownership expenses?

Your Credit Situation

Are there specific issues you could realistically improve with additional time?

Your Housing Goals

Does purchasing now fit your current circumstances and longer-term plans?

A mortgage professional can provide information about financing, but the decision to purchase should reflect your broader financial goals.

What Should You Avoid While Preparing for a Mortgage?

If you’re planning to apply—or already have a mortgage application in progress—avoid unnecessary financial changes without first understanding their potential impact.

Examples include:

• Missing payments
• Opening multiple credit accounts
• Financing a new vehicle
• Increasing credit card balances substantially
• Taking out personal loans
• Moving significant funds without keeping documentation

If you’re already working with a lender, speak with your loan officer before making major financial changes.

Can a Co-Borrower Help If You Have Bad Credit?

Adding another borrower doesn’t simply erase a lower credit score.

When multiple borrowers apply for a mortgage, applicable underwriting guidelines determine how:

• Credit
• Income
• Debts
• Assets

are evaluated.

A co-borrower may affect qualification, but the outcome depends on the entire application and mortgage program.

Consumers should not add someone to a mortgage solely because they assume it will automatically solve a credit problem.

Can a Larger Down Payment Help With Bad Credit?

A larger down payment may affect certain aspects of a mortgage transaction, such as loan-to-value ratio.

However, it does not automatically override credit requirements.

Qualification still depends on applicable underwriting guidelines.

Before assuming you need to make a substantially larger down payment, compare available mortgage options and consider the impact on your savings.

Bad Credit and First-Time Homebuyer Programs

First-time homebuyer programs vary across the United States.

Depending on where you purchase, state or local housing agencies may offer programs involving:

• Down payment assistance
• Closing cost assistance
• Homebuyer education
• Specific mortgage products

Each program establishes its own eligibility requirements, which may include:

• Income limits
• Purchase price limits
• Credit requirements
• Property requirements
• Homebuyer education
• Occupancy requirements

Being a first-time buyer does not automatically qualify someone for assistance.

Because MortgageRight serves borrowers nationwide, buyers should review programs available in the state or locality where they plan to purchase and verify current eligibility requirements.

Mortgage Qualification Varies Across the United States

Major federal mortgage programs operate nationally, but the overall homebuying experience varies considerably across the country.

Factors that can affect affordability and financing include:

• Property taxes
• Homeowners insurance
• Local housing costs
• State assistance programs
• Property type
• Applicable loan limits
• Closing costs
• State and local requirements

For example, insurance considerations in coastal areas may differ from those in inland markets, while property taxes and closing practices can vary significantly between states.

Mortgage qualification should therefore be based on the specific borrower, property, mortgage program, and applicable requirements—not generalized assumptions about where someone lives.

MortgageRight is committed to providing equal access to mortgage information and services without discrimination based on protected characteristics under applicable federal or state law.

Bad Credit Mortgage Myths

Myth #1: You Need Perfect Credit to Buy a House

Reality: Mortgage programs may accommodate a variety of credit profiles. Eligibility depends on the complete application.

Myth #2: A Low Credit Score Means Automatic Denial

Reality: Credit score is only one factor evaluated during mortgage underwriting.

Myth #3: FHA Loans Are Only for People With Bad Credit

Reality: FHA loans are available to eligible borrowers who satisfy applicable requirements and are not exclusively intended for borrowers with lower credit scores.

Myth #4: You Need a 20% Down Payment If Your Credit Isn’t Excellent

Reality: Down payment requirements vary based on the mortgage program and transaction. There is no universal rule requiring a 20% down payment simply because a borrower has less-than-perfect credit.

Myth #5: You Should Pay Off Every Collection Before Applying

Reality: The treatment of collection accounts varies. Speak with a mortgage professional before making significant credit-related changes solely for mortgage qualification.

Myth #6: Once You’re Pre-Approved, Your Credit Doesn’t Matter

Reality: Financial changes occurring before closing may affect mortgage qualification. Continue making payments on time and avoid unnecessary changes to your finances during the mortgage process.

Mortgage Readiness Checklist for Buyers With Credit Concerns

Before applying for a mortgage, consider reviewing:

Credit

• Check your credit reports
• Identify potential inaccuracies
• Review current balances
• Review recent payment history

Income

• Gather income documentation
• Understand your employment and income history
• Identify all income you plan to use for qualification

Debt

• Review credit cards
• Auto loans
• Student loans
• Personal loans
• Other applicable obligations

Assets

• Review available savings
• Estimate potential down payment
• Prepare for closing costs
• Consider emergency reserves

Homebuying Budget

Consider potential expenses such as:

• Principal and interest
• Property taxes
• Homeowners insurance
• Mortgage insurance, when applicable
• HOA dues, when applicable
• Utilities
• Maintenance

 

Frequently Asked Questions About Buying a House With Bad Credit

Can you buy a house with bad credit?

Potentially. Mortgage qualification depends on the loan program, lender requirements, credit history, income, debt, assets, property, and other underwriting factors. A lower credit score does not automatically prevent someone from obtaining a mortgage.

What is the lowest credit score to buy a house?

There is no universal minimum score for every mortgage. FHA guidelines provide certain financing possibilities beginning at a qualifying score of 500, subject to additional requirements, while conventional and other programs may have different standards. Lenders may also establish requirements beyond program minimums.

Can I buy a house with a 500 credit score?

Certain FHA guidelines may provide financing possibilities for borrowers with qualifying scores between 500 and 579 when additional requirements are satisfied. However, availability varies, lender requirements may be higher, and meeting a minimum score does not guarantee approval.

Can I buy a house with a 580 credit score?

Potentially. FHA guidelines generally provide for maximum financing beginning at a qualifying credit score of 580, subject to all other borrower, lender, property, and program requirements.

Can I buy a house with bad credit and no down payment?

Certain mortgage programs, such as VA and USDA loans, may provide qualified borrowers with financing that does not require a traditional down payment. However, both programs have specific eligibility requirements, and credit standards still apply. Zero-down financing does not mean there will be no closing costs or other expenses.

Is it better to improve my credit before buying a house?

It depends on your circumstances. Improving credit may potentially expand available mortgage options or affect pricing, but consumers should evaluate their current eligibility, housing needs, savings, and financial goals before deciding whether to purchase or wait.

The Bottom Line: Bad Credit Doesn’t Automatically End Your Homeownership Plans

Having less-than-perfect credit doesn’t necessarily mean buying a home is impossible.

Mortgage qualification involves much more than one number.

Lenders may evaluate your:

• Credit history
• Income
• Employment
• Debt
• Assets
• Down payment
• Property
• Loan program
• Overall financial profile

Some borrowers may already have mortgage options available. Others may benefit from spending additional time improving their financial profile before purchasing.

The key is understanding where you actually stand rather than assuming that a lower credit score automatically eliminates homeownership.

Wondering What Mortgage Options May Be Available?

You don’t need to determine your mortgage eligibility on your own.

MortgageRight’s loan professionals work with homebuyers across the United States to evaluate their individual financial circumstances and explore mortgage programs for which they may qualify.

Whether you’re ready to purchase now or want to understand what steps could help you prepare for the future, starting with accurate information can help you make a more informed decision.

Connect with a MortgageRight Loan Officer today to discuss your homeownership goals and explore mortgage options that may be available based on your individual circumstances.

 

Compliance Disclosure

This content is provided for general educational purposes and does not constitute a commitment to lend or a guarantee of mortgage approval, qualification, rates, terms, or program availability. Mortgage requirements are subject to change and may vary based on borrower qualifications, credit history, loan program, property, lender or investor guidelines, and applicable federal, state, and local requirements. MortgageRight is committed to Equal Housing Opportunity and conducts lending activities in accordance with applicable fair lending laws, including the Fair Housing Act and Equal Credit Opportunity Act.