Buying a home is rarely a simple process, even under the best financial circumstances. But when your credit score is less than ideal, the path to ownership can feel especially murky. Whether you’ve had past financial setbacks or are currently rebuilding your credit, the idea of qualifying for a mortgage may seem out of reach. The good news: a low credit score doesn’t automatically disqualify you from buying a house. It does, however, mean you’ll need to navigate the real estate and lending landscape with care and strategy.
Understanding how to buy a house with a bad credit score starts with acknowledging the real challenges that come with it—primarily around financing. A lower score typically signals higher lending risk, and that can translate to higher interest rates, stricter loan terms, or fewer available options. For homebuyers, especially first-timers, the fear of rejection or overwhelming costs often leads to hesitation. But taking a closer look at the full picture can help clear the haze and open up possibilities.
This is not just a financial question. It’s a personal one. Your credit score may reflect past circumstances more than future potential, and owning a home can play a crucial role in stabilizing your long-term financial outlook. If you’ve been wondering whether it’s even worth trying to buy a home right now—or what compromises might be involved—you’re not alone. The process is more layered than just getting approved for a loan, and gaining clarity up front can lead to better decisions down the line.
Can You Buy a House with a Bad Credit Score?
The short answer is yes—you can buy a house with a bad credit score. While it’s true that a credit score plays a significant role in the mortgage approval process, it’s not the only factor lenders consider. Your income, employment history, down payment, and existing debt all weigh into their decision as well. In some cases, compensating for low credit with strengths in these other areas can help you qualify for a home loan.
Generally, a credit score under 580 is considered poor by most lenders. However, some programs and lenders work specifically with buyers who fall into this range. FHA loans, for example, are backed by the federal government and are designed to assist borrowers with lower credit scores and smaller down payments. These loans won’t be the right fit for everyone—but they can offer a starting point for those struggling with traditional lending requirements.
That said, there are trade-offs. Buying a house with bad credit usually means facing higher interest rates and potentially stricter loan terms. This affects not just how much you’ll qualify to borrow but also how much you’ll ultimately pay. That’s why it’s important to go into the process fully informed—so you can weigh the cost of waiting and improving your score against the urgency or opportunity of buying now.
What Counts as “Bad” Credit in Home Buying?
Credit scores typically fall into ranges: Excellent (750+), Good (700–749), Fair (650–699), and Poor (below 650). In real estate financing, these ranges influence both your mortgage eligibility and your borrowing costs. While some lenders will consider applicants with scores in the 500s, most conventional loans require a score of at least 620. Anything below that is considered subprime and often subject to additional documentation, higher rates, and more limited loan products.
It’s also worth noting that different lenders have varied interpretations of what’s acceptable. One lender’s “no” could be another’s “maybe”—especially if other aspects of your financial profile are strong. That means your credit score, while important, doesn’t operate in a vacuum. With the right strategy, even buyers with less-than-perfect credit can find realistic pathways to homeownership.
What Homebuyers Should Know About Credit Challenges in Real Estate
Your credit score is a financial snapshot, not a full biography. That said, it plays an outsized role in buying a home because lenders use it to estimate how likely you are to repay a long-term loan. This risk assessment affects everything from your loan approval to the amount you’ll pay over the life of your mortgage. The lower your score, the higher your perceived risk—and the more you’ll likely pay in interest to offset it.
Still, focusing solely on credit score can be misleading. Credit history, including the types of debt you’ve carried and how you’ve managed them, often matters just as much. Some borrowers with low scores may have valid explanations—such as medical debt, temporary loss of income, or thin credit profiles—that lenders consider differently. Occasionally, with solid income and a good explanation, lenders will show more flexibility than the numbers initially suggest.
Today’s Housing Market and Buyer Expectations
In today’s competitive housing market, having a perfect credit score is far from the norm. In fact, many buyers currently face affordability challenges, making alternative paths to ownership more relevant than ever. Home prices remain high in many areas, and while mortgage rates fluctuate, they tend to be less forgiving for individuals with low credit. That makes it even more important for credit-challenged buyers to understand their positioning—and start their search with clear expectations.
Planning and patience don’t have to mean putting dreams on hold forever. Instead, they can help you target homes and financing options that align with your current financial capacity while preserving flexibility for the future. Knowing what you’re likely to qualify for can help you reset expectations and avoid frustration. It also reduces the risk of overextending financially, something that low-credit buyers need to watch closely.
Ultimately, buying a house with bad credit is a balance of timing, risk, and opportunity. It’s not just about winning lender approval—it’s about making a sustainable, financially healthy decision for your future. The more informed you are going in, the better positioned you’ll be to navigate the range of possibilities that are still available to you.
How to Buy a House with a Bad Credit Score: A Step-by-Step Guide
If you’re trying to buy a house with bad credit, you’re not alone—and it’s not impossible. The key is understanding how to work within the system, plan ahead, and use the tools available to improve your chances of getting approved. With the right strategy and a little patience, owning a home is still very much within reach.
In the steps below, we’ll walk you through exactly how to prepare, what to expect, and how to position yourself for the best possible outcome. Expect some effort—especially if credit challenges need to be addressed—but every single step moves you closer to your goal.
Step 1: Understand what “bad credit” means to mortgage lenders
Start by finding out exactly where your credit stands and how lenders interpret your score. In most cases, lenders consider anything under 620 to be a “bad” FICO score, while 580 is often the minimum for FHA loans.
Request your credit reports from the three major bureaus—Equifax, Experian, and TransUnion—and verify both your FICO score and the data being reported. Lenders will do the same, so it’s important that you catch any errors or outdated accounts before they do.
Beyond the number, lenders look at your credit history details: payment history, credit mix, utilization ratios, and length of credit history. Understanding your credit profile will show you where you stand and where you might have leverage.
Step 2: Identify and correct credit report errors
Dispute any inaccuracies on your credit report as soon as possible. Even small errors can drag down your score or flag you as a risky borrower.
Look closely for accounts that aren’t yours, old debts that should’ve aged off, duplicate listings, or incorrect payment histories. File disputes with each credit bureau and provide documentation to support your claims. They’re required to respond within 30 days.
Correcting even a single large mistake can add points to your credit and make a meaningful difference in your mortgage eligibility—especially if you’re near a key score threshold like 580 or 620.
Step 3: Work on improving your credit where possible
Take targeted steps to boost your credit score before applying for a mortgage. Even modest improvements can expand your loan options and improve your interest rate.
Pay down high credit card balances to reduce your credit utilization. Make every payment on time from this point forward. Avoid opening new lines of credit unless strategically necessary. If your credit file is thin, consider adding a secured credit card or becoming an authorized user on someone else’s long-standing, responsibly managed account.
You don’t need a perfect score, but lenders need to see progress and momentum in the right direction. A little cleanup and a few months of positive activity can go a long way.
Step 4: Establish how much house you can afford
Get a clear picture of your budget based on your income, debt, and expected monthly expenses. With bad credit, you may face higher interest rates and down payment requirements—so budgeting wisely is key.
A good starting point is the 28/36 rule: plan for your housing costs to be no more than 28% of your gross income, and total debt (including housing) no more than 36%. Be realistic and leave room for taxes, insurance, maintenance, and unexpected repairs.
When you understand what you can truly afford, you’re less likely to overextend—and more likely to convince lenders you’re financially responsible, even with a lower credit score.
Step 5: Save for a larger down payment
Plan to contribute more up front to offset the risk your lower credit score poses to lenders. The more money you put down, the more seriously lenders take your application.
While FHA loans allow down payments as low as 3.5% for scores above 580, buyers with scores below that often need to put down 10% or more. A larger down payment can also reduce or eliminate mortgage insurance, lower your interest rate, and possibly help you qualify for certain loan programs.
Even if you can’t reach 20%, aim to save as much as you reasonably can. It sends a strong signal of commitment and financial discipline.
Step 6: Research mortgage programs for bad credit buyers
Look into loan programs that are designed to accommodate buyers with less-than-perfect credit. A conventional mortgage isn’t always the only—or the best—way forward.
FHA loans are a common starting point, as they accept lower scores and have flexible income and debt-to-income requirements. You might also explore VA loans (if you qualify), USDA loans for rural areas, and community-based lending programs that base approval on more than just a credit number.
Some lenders also offer non-QM (non-qualified mortgage) loans. These can carry higher rates but tend to be more forgiving of credit issues. Just be cautious and weigh the long-term costs closely.
Step 7: Talk to multiple lenders and mortgage brokers
Shop around to find lenders who are experienced in working with bad credit borrowers. Not all lenders use the same standards, and rates can vary widely depending on how they interpret your profile.
Prepare your financial documents—tax returns, pay stubs, bank statements, debt info—so you can get accurate quotes. A good mortgage broker can connect you to options that aren’t obvious or widely advertised and help match you with a lender who takes a more holistic view.
Don’t automatically go with the first lender who says “yes.” Compare fees, rates, terms, and customer support to find the best overall deal for your situation.
Step 8: Get pre-approved before house hunting
Secure a mortgage pre-approval before you start shopping seriously. This shows sellers you’re ready to buy and gives you a clear budget to work within.
Unlike pre-qualification, pre-approval involves a full financial review by a lender—which means it carries real weight. It confirms the maximum loan amount you qualify for, sets realistic expectations, and can help you move quickly when you find the right home.
Make sure your credit was recently updated and reflect your most recent financial progress before getting pre-approved. You only want lenders pulling your report when it’s likely to help you, not hurt you.
Step 9: Consider a co-signer or co-borrower
If your credit is too low to qualify on your own, you may want to explore applying with a co-signer or co-borrower. This can strengthen your application significantly—if done wisely.
A co-signer agrees to take responsibility for the loan if you don’t pay, while a co-borrower shares ownership and liability equally. In both cases, their higher credit score and income can improve your chances of approval and help you secure better terms.
However, it’s a serious financial partnership. Talk openly about responsibilities, legal risks, and contingency plans before moving forward. You want clarity, not tension later.
Step 10: Be strategic about the types of homes you consider
Focus your search on homes that align with your financial profile and mortgage pre-approval. This keeps your offer competitive—and more likely to be accepted.
Stick to properties that don’t require extensive repairs, unless you have renovation funds set aside or find a renovation loan you can qualify for. Be realistic about location, taxes, and maintenance costs as well. You want to avoid stretching your budget too far—especially if you’re already working with tighter credit conditions.
Sellers and their agents may take your offer more seriously when it’s clean, well-prepared, and easy to close. That strategic edge matters in a competitive market.
Step 11: Build a strong offer with the right team
Make your offer as strong as possible by presenting a complete, clean package. Work with a real estate agent and lender who are familiar with credit-challenged buyers to coach you through the details.
Include a strong earnest money deposit, proof of funds for your down payment, and a pre-approval letter. If you expect financing to take a bit longer because of additional underwriting, prepare your paperwork early and set reasonable timelines in your offer.
The more prepared and serious you appear, the more likely sellers are to accept—even if your credit isn’t perfect.
Step 12: Stay organized and responsive during closing
Once your offer is accepted, the mortgage process kicks in. This is where being organized makes or breaks your success.
Respond quickly to all lender requests, submit documentation on time, and stay in close contact with your loan officer. Any delay or missing document can extend closing—sometimes fatally.
Expect a bit more scrutiny during underwriting due to your credit profile. That’s normal. If you’ve followed the steps above, you’re prepared to answer questions and explain past credit issues confidently. Stay calm and focused—you’re almost there.
Now that you’ve explored the steps involved in buying a house with a bad credit score, it’s time to dig deeper into what this process truly means. Understanding the nuances behind financing options, evaluating the long-term impact, and weighing realistic paths forward can help you be strategic, not just hopeful. Buying a home with less-than-perfect credit is possible—but knowing what you’re navigating makes all the difference.
Understanding Lenders and Loan Types with Bad Credit
When your credit score is below average, your choice of lenders and loan products naturally becomes more limited. Traditional mortgage lenders—such as large banks—often maintain conservative approval guidelines, and may not be willing to take a risk on borrowers with low credit scores. However, certain lenders specialize in helping people with imperfect credit find financing, including credit unions, FHA-approved lenders, and non-traditional financial institutions.
Government-backed loans such as FHA, VA, or USDA loans can offer more lenient credit requirements than conventional mortgages. FHA loans, for example, allow credit scores as low as 500 with a 10% down payment, or 580 with a 3.5% down payment. Keep in mind, you’ll still need to provide documentation proving stable income and the ability to repay.
Some lenders may offer subprime mortgage products. While these loans can open doors for homeownership, they often carry higher interest rates, upfront fees, or adjustable rates that could rise dramatically. It’s important to read the fine print and fully understand the terms before proceeding. Always compare multiple offers and consider talking to a housing counselor accredited by HUD.
Navigating Higher Costs and Trade-Offs
Buying a home with poor credit usually comes at a price—literally. Since you’re perceived as a higher-risk borrower, interest rates are typically higher. Even a slight increase in APR can add tens of thousands of dollars over the life of a mortgage. On top of that, you may have to pay for private mortgage insurance (PMI), especially if your down payment is less than 20%.
Closing costs, lender fees, and reserve requirements might also be more substantial when credit risk is elevated. It’s not uncommon for lenders to require you to hold several months of mortgage payments in savings to close on a loan. This means your upfront costs could be significantly higher than if you had good credit.
Another potential trade-off is a limited choice of homes. With financing constraints, your pre-approval amount may be lower. That can limit the neighborhoods or types of properties you’re able to consider. Flexibility in your expectations—both financially and emotionally—is vital. Think long-term about whether the investment makes financial sense, or whether it’s better to wait and improve your score first.
Keys to Strengthening Your Position Before Buying
Even if you have a low credit score now, that doesn’t mean you’re locked into it forever. In some cases, just a few months of strategic financial action can significantly improve your credit profile. Paying down credit card balances, making on-time payments, and disputing any errors on your credit report can help.
Some buyers also turn to manual underwriting options. Here, the lender evaluates your financial history more holistically—looking at rent payments, utility bills, and other recurring obligations. This method is more labor-intensive but can be beneficial for buyers whose credit score doesn’t reflect their true reliability.
In the meantime, gathering other strengths—like a bigger down payment, a co-signer with strong credit, or documented income stability—can help reduce the perceived risk in the eyes of a lender. Taking a short delay to improve your standing could open the door to better terms, saving you money over time.
The Emotional and Financial Mindset to Maintain
Buying a home is always a mix of logic and emotion—but navigating it with bad credit leans more heavily on patience and discipline. If you’re planning to buy regardless of your score, be prepared to face rejections, competing offers, and additional documentation requirements. Having a thick skin and a level-headed approach is essential.
Focus on long-term goals rather than short-term gratification. Owning a home is an important milestone, yes, but the wrong financing terms could turn it into a costly mistake. Understand that waiting six months to raise your score might yield much better options. Time can be a friend in this process, especially when used strategically.
Finally, be honest with yourself about what you can afford—not just what you can qualify for. A lender may approve you for a certain amount, but that doesn’t mean you should spend it all. Budget realistically and include ongoing costs like repairs, taxes, and unexpected expenses.
Pros and Cons of how to buy a house with a bad credit score
Pros
The primary benefit of buying a house with a bad credit score is that it allows you to start building equity and investing in your future without having to wait years to improve your credit. For buyers with stable income and a long-term view, homeownership can still be a practical option despite the score.
You also have access to government-backed loans, such as FHA, that are designed specifically for buyers in your situation. These programs aim to make homeownership more accessible by reducing some of the traditional barriers posed by poor credit.
Furthermore, successfully managing a mortgage can actually help rebuild your credit. Making consistent, on-time payments is one of the most effective ways to demonstrate creditworthiness to future lenders.
Cons
The biggest drawback is cost. You’ll almost certainly face higher interest rates, which can make your monthly payments more expensive and inflate the total cost of homeownership over time. Poor credit also limits your negotiating power with lenders.
There’s also an increased risk of default. If your finances are already stretched thin, taking on a high-interest mortgage may compromise your ability to save, handle emergencies, or stay current on payments—potentially leading to foreclosure and even worse credit down the line.
Lastly, you may need to make compromises in the home you buy. Smaller properties, less competitive neighborhoods, or older homes with more repair needs might be the only options within budget due to limited financing.
Alternatives to how to buy a house with a bad credit score
Rent-to-Own Agreements
Rent-to-own contracts allow you to live in a home as a renter while building equity toward eventual ownership. A portion of your rent goes toward the purchase, and you often have the option—but not the obligation—to buy at a predetermined time or price.
This method gives you time to improve your credit before applying for a traditional loan, while locking in the property and building potential equity. However, these agreements can be complex and should be reviewed by a real estate attorney before signing.
Buying with a Co-Signer
If you have a trusted family member or partner with good credit, applying for a mortgage with a co-signer can dramatically improve your loan terms. Their credit helps offset your risk profile and can boost your approval chances or secure better interest rates.
The major consideration is that your co-signer becomes financially liable for the loan. If you default, their credit takes the hit too, so this path requires deep trust and clear communication.
Saving and Waiting
Sometimes the most strategic choice is to wait. Take 6–12 months to raise your score, reduce debts, and save for a larger down payment. This approach doesn’t give instant gratification, but it could unlock significantly better mortgage options later.
You might also benefit from using this time to research neighborhoods, housing trends, and future-proof your investment by buying in an area likely to appreciate in value over time.
Living with Family or House Hacking
In some cases, temporarily moving in with relatives while saving aggressively can put homeownership within realistic reach. Alternatively, house hacking—buying a duplex or multi-unit property and renting out part of it—can offset mortgage costs significantly, even with higher interest rates.
Both approaches require creativity and discipline, but they can lead to financial independence much faster than jumping into an unfavorable mortgage too soon.
Why beycome Is the Smartest Option for how to buy a house with a bad credit score
When every dollar counts, beycome offers something few platforms can: empowerment and savings without compromise. If you’re navigating the homebuying process with a low credit score, you likely face higher costs across the board. That’s exactly why beycome’s commission-free, modern approach matters even more. By letting buyers connect directly with listing owners and use digital tools to manage the transaction, we simplify the process without the financial strain.
With over 18,000 homes sold and more than $213 million in commissions saved, beycome users have proven that modern real estate doesn’t have to be expensive or exclusive. In fact, sellers save an average of $13,185 by going through beycome—which shifts the financial balance in your favor, especially if higher loan costs are unavoidable due to credit.
We’re celebrating thousands of 5-star reviews and a new home sold every 30 minutes. Whether you’re just beginning or ready to make an offer, our platform is optimized to support you. From our home value calculator to exclusive buyer tools, you get the knowledge and negotiation leverage you need inside a clean, user-controlled interface.
No-pressure resources, transparent pricing, and one of the smartest networks in real estate—that’s beycome. For buyers with challenged credit, our mission is to keep your goals in sight and your finances protected.
Frequently Asked Questions About how to buy a house with a bad credit score
Can you buy a house with a credit score under 600?
Yes, it’s possible—especially with government-backed loans like FHA, which accept credit scores as low as 500, depending on your down payment. You’ll need to meet income and documentation requirements, and be prepared for higher interest rates and closing costs.
What is the minimum credit score to qualify for an FHA loan?
To qualify for an FHA loan, you need a minimum credit score of 580 to put down 3.5%. If your score is between 500 and 579, you can still qualify, but a 10% down payment is required.
Is it better to rent or buy if I have bad credit?
It depends on your financial stability and long-term goals. Renting may be more flexible and affordable short-term, but buying—if done wisely—can lead to equity and stability. Sometimes delaying your purchase to improve your credit creates better long-term outcomes.
Will a higher down payment help me get approved?
Yes. A higher down payment reduces the lender’s risk, making them more likely to approve your loan even if your credit is weak. It can also help you avoid PMI and lower your overall loan balance.
How can I improve my credit score before buying?
Focus on paying bills on time, reducing credit card balances, disputing errors on your credit report, and refraining from opening new credit lines. Even a few months of effort can make a significant impact.
Can I buy a house with bad credit if I have a co-signer?
Yes, having a co-signer with good credit can bolster your application and help you qualify for better loan terms. However, that person becomes financially responsible if you default, so this option requires serious trust and legal clarity.
What is manual underwriting and how can it help?
Manual underwriting is a process where a lender reviews your financial history in detail—looking beyond your credit score. Factors like rent history, utility payments, and stable employment can work in your favor. It’s often used for FHA loans.
Are there lenders who specialize in bad credit mortgages?
Yes, some lenders focus specifically on subprime or bad credit loans. These lenders accept higher risk but typically charge higher interest rates and fees. Always compare offers and consult a licensed mortgage broker or housing counselor before proceeding.
Will buying a house improve my credit?
If you consistently make your mortgage payments on time, it can significantly improve your credit score over time. However, missing payments or defaulting can further damage your credit, so proceed carefully.
Does beycome help buyers with bad credit?
While beycome doesn’t offer credit repair services or financing directly, it provides a cost-efficient platform that allows buyers to connect directly with sellers, access powerful tools, and save money—which is crucial when dealing with higher loan costs associated with bad credit.