Key Takeaways
- You can buy a house with a credit score of 600, or lower, in some cases.
- FHA loans, VA loans, and USDA loans are among the options for home buyers who want to secure a low credit loan.
- Borrowers with low credit scores present a higher risk to lenders, meaning they have to pay higher interest rates.
A 600 credit score can still open the door to becoming a homeowner. A score of 600 falls into the “eligible” range, meaning you can pay a higher interest rate, but still be able to get a few mortgage plans. Most lenders also look at your income, work history, credit, and ability to make consistent mortgage payments – and with the right loan plan and preparation, buying a home with a 600 credit score is possible. Here’s what that means for your options and how to move forward with confidence.
Can I buy a house with a 600 credit score?
To answer the question, yes, you can buy a house with a 600 credit score. Lenders don’t just look at your credit; they also consider your salary, work history, ratio of income to debtand your ability to make consistent mortgage payments. If you can provide proof of a steady source of income and can show that you can pay the mortgage regularly, you will have a chance of being approved.
The key is to find a loan program that is suitable for your financial situation.
What credit score do I need to buy a house?
I credit score you need to qualify The home loan will largely depend on the loan program itself. Each type of loan has its own set of requirements and restrictions that you must meet to qualify. In the table below, we’ll break down some of the most common types of loans and the credit scores you’ll need to qualify.
| Type of loan | Low credit score |
| Common | 620 |
| FHA loan | 500 (with 10% down) or 580 (with 3.5% down) |
| VA loans | There is no legal minimum (most lenders prefer 620) |
| USDA loans | There is no legal minimum (usually 620+) |
With a credit score of 600, qualifying for a conventional loan will be difficult. However, FHA, VA, and USDA loans are often viable options.
FHA loan
FHA loans are one of the most popular options for consumers with low credit scores. You’ll need at least 580 points for a 3.5% down payment, or 500 points for 10% down. This type of loan is also intended first time home buyers.
VA loan
If you are looking to get a VA loan, you must be a veteran, an active duty service member, or an eligible living spouse. Although the VA does not set a minimum credit score, most lenders prefer a minimum of 620.
USDA loans
Low to moderate income borrowers in rural areas are the target beneficiaries of USDA loans. Your household’s adjusted gross income must be less than 115% of the median income in your area. Although you generally need a credit score of at least 620 to qualify, it is possible to be approved with a lower score.
Some important factors lenders consider
As we mentioned earlier, your credit score is not the only thing that matters when it comes to buying a house. There are other important considerations that lenders take into account before deciding whether or not you are approved for a loan.
- Credit history: A review of your credit history can give lenders insight into your ability to pay on time.
- Salary and employment history: Your lender may ask for pay stubs or W-2s to verify your income.
- Debt-to-income ratio (DTI): Lenders want to make sure your debt doesn’t exceed your income.
- Employment history: First time home buyers may be asked to provide proof of past payments.
- Down payment: Making a large down payment can help you get approved for a lower credit score.
How does my credit score affect my ability to buy a house?
A high credit score shows lenders that you are a responsible borrower who can pay debts on time. A high score suggests that you are a responsible borrower who pays your bills on time, which often leads to lower interest rates and better loan terms.
A low score, like 600, makes you a risky bet in the eyes of lenders. To reduce that risk, lenders often charge higher interest rates, which increases your monthly payment and the total cost of the loan.
What loans can you get with a 600 credit score?
As the table above shows, a conventional loan will be difficult to obtain with a credit score of 600, but that does not mean that the dream of buying a house is out of reach. FHA, VA, and USDA loans are all within range for a borrower with a 600 credit score.
Non-QM loans, which typically cater to borrowers who don’t meet standard loan requirements, are another option for those with low credit scores. Remember that these loans usually have low down payments and interest rates.
How to improve your chances of getting approved with a 600 credit score
If your credit score is around 600, taking a few steps before applying can improve your chances of approval and help you qualify for better terms:
- Pay off credit card balances to lower your credit utilization
- Avoid opening new credit accounts before applying
- Make all payments on time for at least a few months
- Save to get paid more
- Get pre-approved and compare offers from multiple lenders
FAQ about buying a home with a 600 credit score
What is the minimum mortgage loan amount?
There is no set minimum credit score for a mortgage, but a typical mortgage requires a score of at least 620.
What is considered good credit?
A “good” score is anything between 670 and 739. Scores within this range will lower your loan rates.
Is 600 a good credit score?
A credit score of 600 falls in the “good” range. It’s not considered ideal, but it’s not too bad either – you still have options for getting a mortgage.
Can I buy a house with bad credit?
Although it may be more difficult, buying a house with bad credit it is impossible. Many loan programs are designed for borrowers with low scores, although they often come with high interest rates and strict requirements.
