Buying a home is a big dream — but if your credit score isn’t perfect, it can feel completely out of reach.
The good news? You can buy a house with bad credit. You just need the right strategy, loan options, and preparation.
In this guide, we’ll show you how to qualify for a mortgage even with less-than-ideal credit, and what steps to take to improve your chances of approval.
💡 First, What Counts as “Bad Credit”?
Your credit score (typically ranging from 300 to 850) tells lenders how likely you are to repay debt. Here’s how most lenders view credit ranges:
| Credit Score | Rating | What It Means |
|---|---|---|
| 740–850 | Excellent | Best loan rates available |
| 700–739 | Good | Solid borrower, few issues |
| 620–699 | Fair | Acceptable for most loans |
| 580–619 | Poor | Harder to qualify; higher rates |
| Below 580 | Very Poor | Limited loan options |
👉 Even if you fall in the poor or very poor category, there are still mortgage programs designed to help.
🏦 1. Explore Loan Programs That Accept Lower Credit Scores
Not all home loans are created equal. Some are specifically designed to help buyers with imperfect credit.
FHA Loans (Minimum Score: 580)
Backed by the Federal Housing Administration, these are the most common option for buyers with low credit.
- Down payments as low as 3.5%
- More flexible credit requirements
- Higher approval rates for first-time buyers
If your score is between 500–579, you can still qualify — but you’ll need a 10% down payment.
VA Loans (for Veterans and Active Military)
Offered by the Department of Veterans Affairs, these loans are available to eligible service members and veterans.
- No down payment required
- No private mortgage insurance (PMI)
- Flexible credit standards (many lenders accept scores as low as 580–620)
USDA Loans (for Rural and Suburban Buyers)
Backed by the U.S. Department of Agriculture, these loans are for homes in eligible rural areas.
- No down payment required
- Low interest rates
- Typically requires a 640+ score, but some lenders are flexible
Subprime or Non-Qualified Mortgages
These are specialized loans for borrowers with poor credit, irregular income, or unique financial situations.
⚠️ Caution: They often come with higher interest rates and fees, so compare offers carefully before signing.
💳 2. Improve Your Credit Before You Apply
Even a small improvement in your credit score can make a big difference in your approval chances and the interest rate you’ll receive.
Here’s how to start:
- Check your credit report for errors at AnnualCreditReport.com
- Pay down high credit card balances (aim for below 30% of your credit limit)
- Make all payments on time for at least six months before applying
- Avoid new debt or credit applications right before your mortgage pre-approval
- Become an authorized user on a trusted family member’s credit card (if possible)
✅ Even raising your score from 580 → 620 can save you thousands over your loan’s lifetime.
💰 3. Save for a Larger Down Payment
A bigger down payment can offset a lower credit score by showing lenders that you’re financially serious.
- Aim for 10%–20% if possible.
- Ask about down payment assistance programs — many states and local governments offer grants or low-interest loans to help first-time buyers.
🧾 4. Get Pre-Approved — Not Just Pre-Qualified
A pre-approval shows sellers and lenders that you’re serious and capable. It involves verifying your income, credit, and debt.
💡 Pro Tip:
Work with a mortgage broker instead of a single lender. Brokers can shop around to find lenders who specialize in bad-credit loans.
🔍 5. Consider Adding a Co-Signer
If a friend or family member with good credit is willing to co-sign your loan, it can strengthen your application — though they’ll share responsibility for repayment.
Use this option carefully and only if both parties fully understand the risks.
🧮 6. Keep Your Budget Realistic
Just because you can qualify doesn’t mean you should borrow the maximum amount.
Aim for a monthly mortgage payment that doesn’t exceed 28–30% of your gross income — including taxes and insurance.
💬 7. Be Patient and Strategic
Sometimes, the best path is to wait six months to improve your credit, pay down debt, and save more for a down payment.
Even modest improvements can unlock better loan terms and reduce your long-term costs.
🧭 Final Thoughts
Bad credit doesn’t have to be a deal-breaker when it comes to homeownership.
With the right loan program, smart credit habits, and preparation, you can get approved — and even save money in the process.
Remember: lenders don’t just look at your score. They also consider your income stability, debt levels, and payment history.
So start improving what you can today — and take your first confident step toward owning your home.