Buying a home is a big step. For people with bad credit, it can feel impossible—but the good news is: it’s not. Even with a low credit score, there are ways to buy a house, qualify for home loans, and get support to improve your chances.
Let’s break it all down step-by-step so you can feel confident navigating your options—even if your credit score isn’t where you want it to be yet.
When you apply for a mortgage loan, mortgage lenders look at your credit report, income, and other financial information. One of the first things they check is your credit score, which comes from data collected by a credit bureau.
Your credit history includes:
Together, this builds your FICO score, which helps lenders decide if giving you a loan is risky. A bad credit score may not stop you, but it usually leads to a higher interest rate, bigger down payment, or limited loan options.
Most lenders follow this scale:
If you have a low credit score, it doesn’t mean you can’t get a mortgage—it just means you’ll need to work harder to prove you can manage your loan responsibly.
In 2025, most lenders use a minimum credit score requirement of 580 for FHA loans, though some may accept even lower scores with a larger down payment.
Tip: A specific credit score minimum is often listed by lenders. Always ask!
Learn more: What is a good credit score range?
Yes! You can still buy a house with bad credit, but you may have to accept:
Some bad credit home loans are designed to help. While you’ll pay more in interest payments, these programs let you start building equity sooner instead of waiting years to boost your credit score.
There are multiple loan options available even with poor credit. Let’s break them down:
Backed by the Federal Housing Administration, FHA loans are one of the most common ways to buy a house with bad credit. You can qualify with a credit score as low as 580, and only need a 3.5% down payment.
If your score is lower—between 500 and 579—you can still qualify, but you’ll need a 10% down payment.
But: You’ll have to pay mortgage insurance every month and possibly upfront, too.
Learn more from the official HUD FHA loans page.
VA loans, backed by the U.S. Department of Veterans Affairs, are available to veterans, active military, and some surviving spouses. They offer:
While there’s no official minimum credit score, most mortgage lenders prefer 580 or higher. These loans are perfect for buyers with bad credit but strong employment history and income.
Learn more on the VA’s website.
The USDA loan is for buyers in rural or suburban areas. Backed by the U.S. Department of Agriculture, this loan option features:
These are great for buyers with a low credit score who meet local income rules. The USDA doesn’t set a minimum credit score, but most lenders prefer at least 640.
While conventional loans are tougher to qualify for with bad credit, they’re not off the table. These loans require:
Some conventional mortgages have fewer fees than FHA or USDA loans, but may come with a higher interest rate if you have a weaker credit score.
The stronger your credit score, the better your chances for a good loan. Even a 20-point improvement can unlock lower mortgage rates.
You can also build credit with:
Pro Tip: Credit.org offers free credit counseling to help with budgeting and improving your credit score.
Your down payment is one of the most important parts of buying a home. With bad credit, you may need a larger down payment to offset the risk.
Let’s say you’re buying a $250,000 home:
If you don’t have enough, look into down payment assistance programs.
If saving is hard, you’re not alone. Many people use down payment assistance programs to help cover upfront loan costs.
These include:
Some states even offer payment assistance programs that reduce your monthly loan amount.
Once you’ve chosen your loan option, your mortgage application will include:
The lender will also do a hard credit inquiry, which may lower your score slightly—so avoid applying for other auto loans or credit cards at the same time.
Buying a house with bad credit is possible—but it may cost more over time.
Still, many buyers choose to move forward now, especially if home prices are expected to rise.
Every step toward better credit and savings gets you closer to owning a home—even with bad credit.
In 2025, more people than ever are buying homes despite having bad credit. Thanks to flexible loan options, payment assistance programs, and smart financial planning, you can buy a house with bad credit and build a stable future.
Whether you’re applying for FHA loans, VA loans, a USDA loan, or even some conventional loans, there are paths forward.
With the right help and preparation, your dream of owning a home is well within reach—even if your credit score isn’t perfect yet.
