How to buy a house with bad credit

by Bill and Aby Brooks, REALTORS® 09/04/2022

While getting approved for a mortgage does require a good credit score, it’s not impossible to buy a house with bad credit. Even if you’re denied by conventional mortgage lenders due to not meeting a minimum credit score, there are options for financing to help you buy your dream home.

Here is a basic guide to some ways you can buy a house with bad credit:

FHA loans

FHA loans are backed by the Federal Housing Administration and have different requirements for qualification than conventional loans. FHA loans are particularly beneficial for first-time home buyers who may have less credit history. There are some special requirements for a FHA loan, however, including only using it to buy a primary residence.

VA loans

If you’re a veteran or currently serving in the armed forces, you may qualify for a loan from the Department of Veterans Affairs. VA loans have their own requirements, including a special one-time funding fee, but can help you buy a house with a lower credit score. Sometimes they can even let you buy without a down payment.

USDA loans

USDA loans are another type of loan backed by the U.S. government, specifically the Department of Agriculture. If you want to buy a home in a rural area, a USDA loan might be a great option for you, even with a low credit score. USDA loan requirements are less strict than conventional loans, but are only available to fund the purchase of properties in designated areas.

Whether you qualify for a conventional loan or not, it’s never a bad idea to improve your credit score. With some time and effort you can boost your score and become eligible for better interest rates, lower down payments and other benefits from lenders. Make sure to keep these options in mind when considering your next financial steps in buying a home.

About the Author

Bill and Aby Brooks, REALTORS®

Aby’s understanding of excellent customer service stems from her extensive professional background. Prior to earning her real estate license in 2005, along with her college degree that focuses on business and engineering, Aby was the head of purchasing, inventory and quality assurance for an OEM medical and aerospace manufacturing company. Known by her clients and fellow realtors for her tenacity, honesty, integrity, and attention to detail, as a full-time realtor, she is also appreciated for her quick response to her client’s needs. Aby has been an avid horse rider and owner since the age of eight, with her husband Billas a local firefighter/EMT they are very active within the community. Bill served as a US Army Airborne Ranger in 75th Ranger Regiment, he is a combat-wounded veteran who was awarded a Purple Heart. Bill's background as facility Manager for an International metals company and as a firefighter/EMT gives him the experience, attention to detail and the desire to go above and beyond to serve his customers. The Brooks' serve on the board of a local non-profit (501c3) that gives back to the veterans, first responders and their families. The Brooks family resides on their small ranch in Manatee County. Aby& Bill excel in all types of real estate and their passion is helping people. “We genuinely like people, growing up in Sarasota and Manatee counties and now raising our own family here, it is an absolute pleasure to share our growing area with newcomers and reminisce with longtime residents. Our area has so much to offer and it is our business to help folks buy and sell their own piece of paradise.”