I Have a Low Credit Score. Can I Still Buy a House?

Maybe you’ve thought about buying a home, but there’s one number stopping you from even asking the question:

Your credit score.

Maybe it’s in the 600s.

Maybe it’s in the 500s.

Maybe you’ve had collections, late payments, a bankruptcy, a repossession, or simply a period when life got expensive and your credit took the hit.

So you’ve already decided:

“There’s no way I’m getting approved for a mortgage.”

Here’s what I want you to know before you automatically count yourself out:

A low credit score can make buying a home more difficult, but it doesn’t necessarily mean homeownership is impossible.

And there is no single universal credit score that determines whether every person can or cannot buy a home.

Let’s talk about what actually matters.

Your Credit Score Is Important—But It’s Not the Entire Application

Mortgage lenders absolutely look at credit.

Your credit history helps a lender evaluate how you’ve handled financial obligations in the past, and your score can affect both loan eligibility and the terms you’re offered.

But lenders generally aren’t evaluating your credit score in complete isolation.

Depending on the loan program and lender, they’ll also look at things such as:

Income

Employment history

Existing monthly debts

Debt-to-income ratio

Assets and available funds

Payment history

Recent credit activity

The type of loan you’re applying for

And the overall strength of your financial profile

Two people with the exact same credit score can therefore have very different mortgage situations.

That’s one reason I don’t recommend deciding whether you can buy a house based solely on a score you saw in an app.

“What Credit Score Do I Need to Buy a House?”

This is where things get confusing online.

You’ll see articles and social media posts giving one magic number:

580.

620.

640.

The problem is that they’re often talking about different loan programs, different underwriting methods or individual lender requirements.

There isn’t one universal minimum credit score for every mortgage.

Let’s look at a few of the major options.

FHA Loans

FHA financing is often discussed when buyers have less-than-perfect credit.

Under FHA’s general framework, borrowers with a credit score of 580 or higher may be eligible for maximum financing with a minimum 3.5% down payment, while borrowers with scores from 500 through 579 generally require at least 10% down.

But here’s the part that sometimes gets left out:

That doesn’t mean every lender has to approve an applicant with a 580—or even a 600.

Mortgage lenders can impose their own underwriting requirements in addition to the basic requirements of a loan program.

So seeing a minimum number online doesn’t mean:

“I have that score, therefore I’m automatically approved.”

It means there may be a potential path worth investigating.

VA Loans

This one is especially important for Veterans and eligible service members.

The Department of Veterans Affairs does not establish a minimum credit score for VA-backed home loans.

That surprises a lot of people.

Private lenders making VA-backed loans, however, still evaluate credit and may establish their own minimum credit requirements.

So if one lender tells a Veteran that their credit score doesn’t meet that lender’s requirements, that does not automatically mean the VA itself has declared the Veteran ineligible for a VA home loan.

The lender’s requirement and the VA’s requirement aren’t necessarily the same thing.

Eligible borrowers still have to meet applicable VA and lender standards for credit, income and the loan they’re requesting.

But this distinction is incredibly important—especially for Veterans who assume their score has permanently eliminated their VA home-loan benefit.

Conventional Loans

Conventional financing has its own underwriting standards.

For example, Fannie Mae’s current requirements generally call for a 620 minimum credit score on manually underwritten fixed-rate loans, while loans evaluated through its Desktop Underwriter automated underwriting system do not have a single minimum credit score requirement imposed in the same way.

Again, this doesn’t mean everyone below or above a particular number will receive the same result.

The entire loan profile matters.

Your Credit Score Can Affect More Than Approval

Here’s another reason credit matters even when you technically qualify.

A stronger credit profile may help a borrower receive better financing terms.

Depending on the loan and market conditions, credit can influence things such as:

Interest rate

Loan pricing

Mortgage insurance

Down-payment requirements

Available loan programs

That means the question isn’t always simply:

“Can I get approved?”

Sometimes the better question is:

“Would improving my credit first put me in a significantly better financial position?”

Those are two very different questions.

What If I Have Collections?

Having a collection account doesn’t automatically answer whether you can qualify for a mortgage either.

The type, amount, age and circumstances surrounding collections can matter, and different loan programs and lenders may treat them differently.

That’s why I’d be careful about immediately paying off every collection account simply because you’re planning to buy a home.

It sounds logical:

Debt is bad → pay debt → score goes up → mortgage gets easier.

Credit doesn’t always behave that predictably.

Before making major changes, talk with the mortgage professional reviewing your application.

You want a plan, not random financial moves based on internet advice.

What About Late Payments, Bankruptcy or Foreclosure?

Past financial problems don’t necessarily prevent someone from ever becoming a homeowner again.

Loan programs can have specific requirements involving major derogatory credit events such as bankruptcy and foreclosure, including potential waiting periods and requirements surrounding re-established credit.

The details depend heavily on the event, timing and loan program.

The important point is:

A financial setback in your past does not automatically mean you’ll never qualify for a mortgage again.

Your timeline may simply look different.

Don’t Try to “Fix” Everything Before Talking to a Lender

This is probably one of the biggest mistakes I see potential buyers make.

They know their credit isn’t great, so they decide:

“I’ll work on it for a year and then talk to somebody.”

But what exactly are you going to work on?

That’s the problem.

Without understanding what’s actually preventing you from qualifying—or what is affecting the terms available to you—you may spend months focusing on the wrong things.

Maybe paying down a particular credit-card balance would help.

Maybe an error needs to be disputed.

Maybe establishing a longer period of on-time payments matters more.

Maybe your debt-to-income ratio is the bigger issue.

Maybe you’re already closer to qualifying than you think.

Or maybe you genuinely need six or twelve months to improve your position.

All of those are useful answers.

The goal isn’t necessarily to get approved today.

The goal is to figure out where you actually stand and what your next step should be.

Be Careful With “Credit Repair” Promises

If you’re working toward homeownership, be cautious with companies or individuals promising to rapidly increase your score or remove accurate negative information.

There are legitimate ways to dispute inaccurate information and improve your credit habits.

But nobody should be promising you a magic credit score overnight.

Sometimes the most effective credit-improvement strategy is also the least exciting:

Pay bills on time.

Reduce revolving balances where appropriate.

Avoid unnecessarily opening new accounts.

Correct legitimate errors.

Manage debt responsibly.

And give positive payment history time to develop.

Not flashy.

But real financial improvement usually isn’t.

Your Debt-to-Income Ratio Matters Too

Let’s say two buyers both have a 620 credit score.

Buyer A earns $6,000 per month and has relatively little recurring monthly debt.

Buyer B earns the same amount but has substantial monthly payments for vehicles, credit cards and other obligations.

Those borrowers don’t necessarily present the same mortgage profile.

That’s because lenders also evaluate the relationship between income and qualifying monthly debt—commonly called the debt-to-income ratio, or DTI.

This is another reason your credit score alone can’t tell you whether you’ll qualify.

A Co-Borrower Doesn’t Automatically “Fix” Bad Credit Either

Another common assumption is:

“I’ll just put somebody with great credit on the loan with me.”

A qualified co-borrower may help in certain situations, but adding another borrower doesn’t simply erase the other person’s credit, debts or financial profile.

The lender still has to evaluate the loan according to the applicable underwriting rules.

It’s another tool—not a magic reset button.

What Should You Do If Your Credit Isn’t Great?

Instead of automatically waiting a year or assuming homeownership isn’t possible, I’d start with information.

Talk to a reputable mortgage lender.

Let them evaluate your actual situation.

Ask:

Where do I stand today?

Which loan programs might fit my situation?

What’s preventing me from qualifying right now, if anything?

What specific changes would improve my position?

How much improvement would actually matter?

What timeline makes sense?

Those answers give you something much more valuable than a random credit-score target.

They give you a roadmap.

You Don’t Have to Be Ready to Buy Today

This is the part I really want potential buyers to understand.

You don’t need to call me and say:

“Jamie, I’m pre-approved and I want to see houses tomorrow.”

Maybe you’re ready now.

Great.

Maybe you’re six months away.

That’s fine.

Maybe your lender says:

“Here’s what we need to improve, and let’s revisit this in three months.”

That’s useful too.

And maybe you’re a year away.

I’d still rather you spend that year following an actual plan than spend twelve months guessing.

Don’t Let a Number Make the Decision for You

Your credit score matters.

I’m not going to tell you it doesn’t.

But your score is one part of a much larger financial picture, and mortgage requirements vary by loan program and lender.

So if the only thing stopping you from exploring homeownership is the belief that:

“My credit isn’t good enough.”

Don’t make that decision entirely on your own.

Find out.

Talk to a lender.

Understand your options.

Build a plan if you need one.

And when the financing side starts coming together, I’ll help you understand the real-estate side.

No pressure to start looking at houses before you’re ready.

Sometimes the first step toward buying a home isn’t scheduling a showing.

It’s simply finding out what your next step actually is.

— Jamie Taylor, REALTOR®
Your Tennessee Homes Team
Haus Realty & Management
Serving Middle Tennessee

This article is for general educational purposes and does not constitute lending, credit-repair or financial advice. Mortgage eligibility, credit requirements, interest rates and underwriting standards vary by borrower, lender and loan program. A licensed mortgage professional can evaluate your individual circumstances.