Can you get a mortgage with bad credit? (2024)

FAQs

What is the lowest credit score allowed for a mortgage? ›

You can get a mortgage with a credit score as low as 620, 580 or even 500, depending on the type of loan. Some mortgage lenders offer bad credit loans with more flexible qualifying requirements but higher costs. Others offer free credit counseling to help you improve your score before applying for a loan.

Having bad credit doesn't always mean you can't enjoy the benefits of homeownership. Instead, it might just require additional research when looking for financing. With a loan backed by the government like an FHA loan, you can qualify for a mortgage even with a credit score of 500.

For example, FHA technically allows FICO scores as low as 500. But most lenders won't go below 580, and some even require a score of 620 for an FHA loan. According to Fannie Mae, the majority of mortgage lenders apply mortgage overlays. The most common overlay relates to credit scores.

Your credit score has less bearing on your ability to get a mortgage than you might think. The minimum FICO score for a conventional loan is 620. The best rate comes with a score of 740 or higher.

What credit score is needed to buy a $300K house? The required credit score to buy a $300K house typically ranges from 580 to 720 or higher, depending on the type of loan. For an FHA loan, the minimum credit score is usually around 580.

Government-backed loan options, such as FHA, USDA and VA loans, are typically the easiest type of mortgage to get because they may have lower down payment and credit score requirements compared to conventional mortgage loans.

What is the easiest loan to get approved for? ›

What is the easiest loan to get approved for? The easiest types of loans to get approved for don't require a credit check and include payday loans, car title loans and pawnshop loans — but they're also highly predatory due to outrageously high interest rates and fees.

After a housing market boom and bust, mortgage lenders have become more strict in their lending standards and requirements. It is not impossible to get a loan, but it is much harder for potential buyers to obtain one than before.

Credit score and mortgages

The minimum credit score needed for most mortgages is typically around 620. However, government-backed mortgages like Federal Housing Administration (FHA) loans typically have lower credit requirements than conventional fixed-rate loans and adjustable-rate mortgages (ARMs).

Mortgage lenders typically want to see a score of 620 or better before approving a conventional mortgage. There are government-insured mortgages if your score is lower, and if your score is 760 or higher you'll qualify for the best interest rates.

You'll usually need a credit score of at least 640 for the zero-down USDA loan program. VA loans with no money down usually require a minimum credit score of 580 to 620. Low-down-payment mortgages, including conforming loans and FHA loans, also require FICO scores of 580 to 620.

Yes, you can buy a house with a 600 credit score — but it would be less challenging if your score were higher. A 600 score will not be high enough to qualify for a conventional home loan, so look into FHA loans, which have lower requirements: 500 with a 10 percent down payment, and 580 with a 3.5 percent down payment.

However, it depends on the lender or financial situation. It's always important to check with your prospective lender, but generally, according to Experian™, most mortgages require about a 620 score. The lender may require a larger down payment to compensate for a low credit score.

FHA loans. To assume an FHA loan, the seller's loan servicer will assess your credit profile and determine whether you can meet standard FHA requirements. You'll generally need credit scores of at least 580, and the home must be your primary residence.

What credit score do you need to get a mortgage? Mortgage lenders typically want to see a score of 620 or better before approving a conventional mortgage. There are government-insured mortgages if your score is lower, and if your score is 760 or higher you'll qualify for the best interest rates.