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How to buy a home with bad credit?

Answer

The best first step is to contact a HUD approved Housing Counselor. The Housing Counselor could help you work on raising your credit score and guide you through the process of getting a mortgage and buying a home.

Most federally insured or direct mortgages through the FHA or USDA require a credit score of 580 or could go even lower. Most conventional mortgages require credit scores in the mid-to-high 600 range.

However, there are some types of mortgages that are funded or insured through federal, state and local governments, which allow for a buyer to purchase a home, even with a credit score lower than conventional mortgage standards.

How to Contact a HUD approved Housing Counselor

Keep in mind there are other factors involved in obtaining a mortgage, such as:

  • Having a source of reliable income.
  • Price of the home.
  • Total sum of the buyer’s other debts.

More Homeownership FAQs from Low Income Households

  • How can homeownership benefit me?
  • How can homeownership benefit me?
  • Are there HUD homeownership programs?
  • How does homeonwership affect your credit score?
  • Is it better to buy a home or rent?