Can I Buy a House with a 600 Credit Score?

Key Takeaways

• You can buy a house with a credit score of 600, or even lower, in some situations.
• FHA loans, VA loans, and USDA loans are among the options for homebuyers looking to secure a mortgage with a lower credit score.
• Borrowers with lower credit scores present a greater risk to lenders, meaning they have to pay higher interest rates.

A 600 credit score can still open the door to homeownership. A score of 600 falls into the “fair” range, which means you may pay a higher interest rate, but you can still qualify for several home loan programs. Many lenders also look at your income, employment history, debt, and ability to make consistent mortgage payments — and with the right loan program and preparation, buying a home with a 600 credit score is absolutely possible. Here’s what that means for your options and how you can 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 income, employment history, debt-to-income ratio, and your ability to make consistent mortgage payments. If you can provide evidence of a steady source of income and can demonstrate that you can afford to make regular mortgage payments, you’ll have a chance of getting approved. 

The key is finding a loan program that you qualify for and that fits your financial situation. 

What credit score do I need to buy a house?

The credit score you need to qualify for a home loan will depend largely on the loan program itself. Each loan type has its own set of requirements and thresholds you have to meet in order 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.

With a 600 credit score, qualifying for a conventional loan will be difficult. However, FHA, VA, and USDA loans are often more realistic options.

FHA loans

FHA loans are one of the most popular options for buyers with lower credit scores. You’ll need at least a 580 score with a 3.5% down payment, or a 500 score with 10% down. This loan type is also intended for first-time homebuyers.

VA loans 

If you’re looking to get a VA loan, you must be a veteran, active-duty service member, or an eligible surviving spouse. While the VA doesn’t set a minimum credit score, most lenders prefer at least a 620.

USDA loans

Low to moderate-income borrowers in rural areas are the intended beneficiaries of USDA loans. Your household’s adjusted gross income must be less than 115% of the median gross income in your area. While you usually need a credit score of at least 620 to qualify, it’s possible to get approved with a lower score.

Other key factors lenders consider

As we mentioned earlier, your credit score isn’t the only thing that matters when it comes to buying a house. There are other key considerations that lenders consider before deciding whether or not you get approved for a mortgage.

• Credit history: A review of your credit history can provide lenders with insight into your ability to make payments on time.
• Income 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 ensure that your debt doesn’t exceed your income.
• Rental history: First-time homebuyers may be asked to provide evidence of past rent payments.
• Down payment: Making a larger down payment can help you get approved with a lower credit score.

How does my credit score impact my ability to buy a house?

A high credit score signals to lenders that you are a responsible borrower who can pay off debts on time. A higher score suggests you’re a responsible borrower who pays debts on time, which often results in lower interest rates and better loan terms.

A lower score, like 600, makes you a riskier bet in the eyes of lenders. To offset that risk, lenders typically 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 illustrates, a conventional loan will be hard to come by with a 600 credit score, but that doesn’t mean that the dream of buying a house is out of reach. The FHA, VA, and USDA loans are all very much within range for a borrower with a 600 credit score.

Non-QM loans, which typically cater to borrowers who don’t meet the requirements for traditional loans, are another option for those with lower credit scores. Keep in mind that these loans tend to have higher minimum down payments and interest rates.

How to improve your chances of approval with a 600 credit score

If your credit score is around 600, taking a few steps before applying can improve your odds of approval and help you qualify for better terms:

• Pay down credit card balances to lower your credit utilization
• Avoid opening new credit accounts before applying
• Make all payments on time for at least several months
• Save for a larger down payment
• Get pre-approved and compare offers from multiple lenders

FAQ about buying a home with a 600 credit score

What is the minimum credit score to buy a house?

There’s no definitive minimum credit score to buy a house, but conventional loans require a score of at least 620.

What is considered to be a good credit score?

A “good” score is anything between 670 and 739. Scores within this range will get you lower mortgage rates.

Is 600 a good credit score?

A 600 credit score falls in the “fair” range. It’s not considered good, but it’s also not the worst – you still have options for getting a mortgage.

Can I buy a house with bad credit?

While it might prove to be a little more difficult, buying a house with bad credit isn’t impossible. Several loan programs are designed for borrowers with lower scores, though they usually come with higher interest rates and stricter requirements.

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