Can You Buy a House With Bad Credit?

The short answer to this question is yes, it is possible. Most lenders will have a minimum credit score to qualify for their loan programs. To review, credit score ranges from 350 to 850 in the mortgage world. Most lenders cannot lend if you have a score between 350 and 579 but let’s break it down.

Most lenders with their conventional offering set a minimum credit score of 620. This doesn’t mean you would automatically be approved for a mortgage, but it is a starting point to continue your discussion and see if you qualify. Government mortgage products typically have a 580 minimum credit score but can go down to 500 though it would be harder to qualify.

There are many factors which play into whether a loan with a lower credit score will get approved. If you have minimal debt that helps. Nothing should be currently delinquent, and you cannot have a bankruptcy in the last 2 years. If you are in one of these situations, you may want to work on repairing your credit score or working on increasing it. Speaking with a mortgage lender such as Hall Financial is a good place to start.

One compensating factor is cash and reserves. The higher your downpayment and having reserves really helps to offset the risk and increases your chances of being approved.

The smartest next step is to speak with a trusted mortgage professional to review your credit and your situation and map out a game plan to being approved and attaining home ownership.