How to Buy a House With Bad Credit

You can buy a house with bad credit, it just takes the right loan program and some strategy. FHA loans accept scores as low as 500, and there are concrete steps to strengthen your application even when your credit isn't where you'd like it.

Start with FHA

FHA is the most forgiving program for lower credit. With a score of 580 you can put just 3.5% down; between 500 and 579 you'll need 10% down. This is usually the most direct path for buyers with damaged or thin credit, and the entire down payment can come from gift funds. Our FHA loan page covers exactly how it works.

Know your real options by score

Different programs accept different scores, and it's worth knowing where you stand across all of them, since a broker can match you to the lender whose requirements fit your profile. Our credit-score-by-loan-type guide lays out the minimums program by program. VA loans, if you're eligible, are often achievable with lower credit and offer zero down, which can make homeownership possible even with a rocky credit history. And if you need time to rebuild before qualifying, how rent-to-own works as a path to buying is also worth understanding.

Strengthen the rest of your application

When your credit is weak, the rest of your file matters more. A larger down payment, significant cash reserves, a low debt-to-income ratio, and stable employment all act as compensating factors that help an underwriter approve a lower-credit borrower. If you can strengthen these, you offset the credit concern.

Quick wins to raise your score before applying

Sometimes a short delay to bump your score pays off. Paying down credit card balances (which lowers your utilization ratio), making every payment on time, and disputing any errors on your credit report can move your score in a matter of weeks or a couple of months. Even a small increase can move you from one tier to a better one, lowering your rate or your down payment requirement.

What to avoid while buying

Don't open new credit, finance a car, or let any payment go late while you're in the buying process, these can drop your score at exactly the wrong moment and derail an approval during underwriting. Keep your credit stable from application through closing.

The honest bottom line

Bad credit makes buying harder, not impossible. The right program (usually FHA or VA), a stronger overall application, and a little score improvement before applying can get you to the closing table. If your credit issues stem from a past event like buying a house after bankruptcy or buying again after a foreclosure or short sale, the waiting periods are often shorter than you'd expect. And once you're in the home, on-time mortgage payments themselves help rebuild your credit over time. The key is working with someone who can match your specific situation to the program and lender most likely to say yes.