Can I Buy a House With Bad Credit?

Yes — you can buy a house with bad credit, but it often requires extra preparation, higher costs, or specialized loan programs. Brokerless helps you understand your options and start with confidence.

💡 What Counts as Bad Credit?

In real estate, bad credit typically means a credit score below 620. Lenders use this number to evaluate your risk as a borrower. Even with a lower score, programs like FHA, VA, and USDA loans can make homeownership possible.

  • Excellent credit: 740 or higher
  • Good credit: 700–739
  • Fair credit: 620–699
  • Poor credit: below 620

🏠 Loan Options for Buyers With Bad Credit

Some mortgage programs are designed to help buyers qualify even with low credit scores. Each comes with its own requirements for down payments, insurance, and documentation — and creative financing can open more doors.

  • FHA Loans: Allow credit scores as low as 500 with 10% down — or 580 with 3.5% down.
  • VA Loans: Available to qualified veterans; flexible on credit, often no down payment.
  • USDA Loans: For rural buyers; credit scores around 640 may qualify with no down payment.
  • Conventional Loans: Usually require a 620+ score, but private mortgage insurance (PMI) can offset risk.
  • Seller Financing: A flexible option where the seller acts as the lender, allowing buyers with limited credit to purchase directly without traditional bank approval. Terms are negotiated privately between buyer and seller.

📉 How Credit Affects Mortgage Costs

Your credit score directly impacts your interest rate, fees, and loan approval. A difference of just 50 points can mean thousands of dollars over the life of a loan.

  • Lower credit scores lead to higher interest rates.
  • Lenders may require larger down payments or cash reserves.
  • Some borrowers pay additional fees or “points” to secure a lower rate.

⚠️ Common Mistakes to Avoid

Even if you qualify for a mortgage, it’s important to avoid these pitfalls that can complicate your purchase or drive up costs:

  • Applying for multiple loans in a short time.
  • Taking on new debt or large credit purchases during approval.
  • Ignoring errors on your credit report.
  • Skipping pre-approval before shopping for homes.

🔍 How Brokerless Helps FSBO Buyers Prepare

Brokerless gives you access to MLS listings and professional support without traditional agent fees. If you’re buying or selling with less-than-perfect credit, our resources and flat-fee services help you save money and stay in control.

Explore Flat Fee MLS Plans

❓ Frequently Asked Questions

1. What credit score do I need to buy a house?

Most lenders require a minimum credit score of around 620 for conventional loans, but FHA loans may allow scores as low as 500 with a higher down payment.

2. Can I buy a house without fixing my credit first?

Yes, but you’ll likely pay higher rates and fees. Improving your credit first can save you thousands over time.

3. How can I raise my credit score quickly?

Pay down balances, avoid new debt, and check for errors on your credit report. Consistent, on-time payments are the fastest way to improve your score.

4. Are there home loan programs for bad credit buyers?

Yes — FHA, VA, and USDA programs are designed to help buyers with lower credit scores qualify for financing.

5. Does Brokerless help with financing?

While Brokerless doesn’t issue loans, we help FSBO sellers and buyers connect with professionals who specialize in low-credit and first-time buyer programs.