A Guide to Buying a House with Bad Credit Scores

You might think that having a credit score in the 500s would keep you from buying a home. But that isn’t always the case.

Depending on your circumstances, you may have lending options that make it possible to overcome that bad credit barrier when buying a home.

Lender Credit Score Requirement

Every lender has a set minimum credit score they require to approve homebuyers for a mortgage. Some lenders will accept lower credit scores while others have stricter requirements.

For example, a big national lender may approve a homebuyer with a 620 FICO for a fixed-rate mortgage. However, a smaller local bank might require a minimum score of 700 to qualify for a mortgage with them.

This means you need to look for the right lender if you have a lower credit score. Online lenders, big national banks, or credit unions may all offer more flexible score requirements.

VA Loans' Credit Score Requirements

Your personal situation may also come into play when it comes to getting a mortgage with bad credit. The best example is VA loans, which are backed by the U.S. Department of Veterans Affairs. VA loans have no minimum credit score requirement.

First-time homebuyers can also generally find more flexible credit score requirements through certain programs, like the HomePath Ready Buyer through Fannie Mae and HomeOne lending program through Freddie Mac.

No matter what your circumstances are, there is one surefire way to find all the opportunities available to you to buy a house with bad credit. All it takes is one free phone call and a quick consultation with a HUD-certified housing counselor.

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