Can You Buy a House With Bad Credit?

What counts as “bad credit” for a mortgage?

There’s no single cutoff, but lenders generally treat scores below the mid-600s as higher-risk. A rough map: 740+ gets the best pricing, around 700 is solid, 620–679 is workable but more expensive, and below 620 is where “bad credit” programs come in.

Conventional loans have traditionally wanted about a 620 minimum, though the rules keep shifting — and government-backed programs go lower. Just as important, two people with the same score can get very different answers depending on what is dragging the number down.

Loan programs built for lower scores

Three government-backed programs exist specifically to help buyers who don’t have pristine credit:

FHA loans — insured by the Federal Housing Administration. A 580 score qualifies with 3.5% down; a 500–579 score can still work with 10% down. FHA is the most common path for lower-credit buyers.

VA loans — for eligible veterans, active-duty service members, and some surviving spouses. There’s no federal minimum score (lenders set their own overlays) and no down payment required.

USDA loans — for eligible buyers in designated rural areas. No set score minimum, no down payment, but you must show you can manage the payment.

These aren’t loopholes — they’re standard programs. A lender or a HUD-approved housing counselor can tell you which one fits.

It’s not just the score — it’s what’s on the report

Underwriters read the actual file, not only the three-digit number. A single serious item can matter more than the score itself: a recent charge-off, an open collection, a pattern of late payments, or a high debt-to-income ratio can all raise questions even if your score looks borderline-okay.

The good news is that many of these have specific, knowable rules — and some don’t have to be paid off to qualify. It’s worth understanding your exact situation: buying with a charge-off and buying with collections each work a little differently.

How your credit affects what the house costs

Approval is only half the story — your credit also sets the price. A lower score generally means a higher interest rate, and on a 30-year mortgage even a small rate difference adds up to real money over time. Lower-credit borrowers may also pay more for mortgage insurance.

That’s not a reason to wait forever — rates can be refinanced later — but it’s a reason to make sure your report is accurate before you lock in a rate, because errors that drag your score cost you at the worst possible moment.

Bad-credit mortgage red flags

A low score attracts “get approved fast” pitches. Be cautious of anyone selling:

What to do before you apply

Whatever your score, the same groundwork helps:

1. Pull all three reports. See exactly what a lender will see on Equifax, Experian, and TransUnion — the items, the balances, and the dates.

2. Check every negative item for accuracy. Wrong balances, duplicate entries, or an item that isn’t yours can hold your score down unfairly. Under the Fair Credit Reporting Act you can dispute anything inaccurate, and it must be corrected or removed.

3. Talk to an FHA-experienced lender and a HUD-approved counselor. HUD-approved housing counseling is low- or no-cost and can map out a realistic plan for your situation.

4. Get a real pre-approval. A proper pre-approval tells you what you actually qualify for — not a guess.

Buying with bad credit: do’s and don’ts

The bottom line on buying with bad credit

Bad credit makes a mortgage harder and more expensive, not impossible. The programs exist; the lever you control is making sure your report is accurate and knowing exactly what a lender will see before you apply.