BUYERS December 25, 2023

Can I Still Buy a House with Bad Credit?



Buying a house with bad credit is challenging, but it’s not impossible. While having a low credit score can limit your options and potentially result in higher interest rates, there are strategies to help you secure a home loan. Here’s what you need to know:

Understanding Bad Credit

Firstly, let’s define “bad credit.” Credit scores typically range from 300 to 850, with higher scores indicating better creditworthiness. A score below 580 is generally considered poor or bad, making it more difficult to qualify for a conventional mortgage.

Options for Buying a House with Bad Credit

  1. FHA Loans:
    • The Federal Housing Administration (FHA) offers loans specifically designed for borrowers with lower credit scores. With an FHA loan, you may qualify with a credit score as low as 500, although a higher score will result in better terms.
    • FHA loans require a minimum down payment of 3.5%, making them accessible for buyers with limited savings.
  2. VA Loans:
    • If you’re a veteran or active-duty service member, you may qualify for a VA loan, which is guaranteed by the Department of Veterans Affairs.
    • VA loans typically have more lenient credit requirements and may be an option for those with bad credit.
  3. USDA Loans:
    • The U.S. Department of Agriculture (USDA) offers loans for rural homebuyers with low to moderate incomes.
    • USDA loans have flexible credit guidelines and may be an option for buyers with bad credit.
  4. Subprime Mortgages:
    • Some lenders offer subprime mortgages, which are designed for borrowers with poor credit.
    • Subprime loans often come with higher interest rates and fees, so it’s essential to carefully consider the terms and ensure you can afford the payments.
  5. Improve Your Credit:
    • Before applying for a mortgage, work on improving your credit score by paying off debts, reducing credit card balances, and addressing any errors on your credit report.
    • A higher credit score will increase your chances of qualifying for a loan and securing better terms.

Tips for Buying a House with Bad Credit

  • Save for a Larger Down Payment: A larger down payment can offset a lower credit score and demonstrate your commitment to the purchase.
  • Shop Around: Different lenders have varying requirements and may offer different loan options. It’s beneficial to compare offers from multiple lenders to find the best terms.
  • Consider a Co-signer: If possible, consider having a co-signer with a higher credit score to help you qualify for a loan and secure better terms.
  • Be Prepared for Higher Costs: With bad credit, you may face higher interest rates, fees, and mortgage insurance requirements. It’s essential to factor these costs into your budget and ensure you can afford the monthly payments.


While buying a house with bad credit presents challenges, it’s possible with the right strategies and understanding of your options. By exploring loan programs designed for borrowers with lower credit scores, improving your credit, and carefully evaluating your financial situation, you can take steps towards homeownership even with bad credit.