Can You Buy a House With Bad Credit in 2027? Your Mortgage Options May Surprise You
Yes, you may be able to buy a house with bad credit, even if another mortgage lender has already turned you down. Your options depend on your credit history, income, debts, down payment, and the requirements of the loan program and lender.
After more than 25 years in the mortgage business, I’ve learned something that surprises a lot of homebuyers: getting turned down by one lender doesn’t necessarily mean you can’t buy a home.
Sometimes it simply means you haven’t found the right lender.
I’m Richard Woodward with NEXA Lending, and I have access to more than 300 mortgage lenders. That allows me to look beyond the limited selection of programs offered by a single bank or mortgage company.
Some of my lenders offer specialized programs for borrowers with lower credit scores. Others may consider borrowers who don’t have a traditional credit score at all.
Does that mean everyone can qualify? Of course not.
But before you give up on buying a home, I think you owe it to yourself to understand the options that may be available.
What Credit Score Do You Need to Buy a House?
The answer depends on the type of mortgage you’re applying for.
There isn’t one universal minimum credit score that applies to every mortgage program.
Here are some common examples:
| Mortgage program | General credit-score considerations |
|---|---|
| Conventional | Many standard automated-underwriting options no longer use a universal minimum score, but lender and program requirements still apply |
| FHA | FHA generally permits scores of 580 or higher with a 3.5% minimum down payment, and scores from 500–579 with at least 10% down, subject to additional requirements |
| VA | VA does not establish a universal minimum credit score, although individual lenders may impose one |
| USDA | USDA eligibility involves credit evaluation and underwriting requirements; lenders may have additional score restrictions |
| Specialized programs | Certain lenders offer manual underwriting, alternative credit evaluation, or programs without a stated minimum credit score |
These are general guidelines, not approval guarantees. Requirements can change, and other factors may determine eligibility.
Here’s what I want you to understand: your credit score is important, but it isn’t the only thing a lender considers.
Can You Buy a House With a 500 Credit Score?
Potentially, yes.
FHA guidelines provide a path for certain borrowers with credit scores between 500 and 579, provided they meet the applicable requirements, including a minimum 10% investment.
However, finding a lender willing to approve a borrower with a score that low can be challenging.
That’s because lenders often have their own additional restrictions.
For example, one lender might require a 620 score, another might consider 580, and a specialized lender might evaluate an application with a lower score.
Those differences can matter enormously.
Having access to hundreds of lenders doesn’t guarantee an approval, but it gives me more opportunities to explore programs that fit your situation.
What if Your Credit Score Is 580 or 600?
A score in this range may open up additional possibilities.
FHA financing is often worth exploring because eligible borrowers with scores of at least 580 may qualify with as little as 3.5% down.
Eligible veterans may also have VA financing options, since the VA itself doesn’t establish a universal minimum credit score.
But credit scores aren’t the entire equation.
Lenders also evaluate your income, employment history, monthly debts, recent payment history, and funds available for closing.
A borrower with a 600 score, stable employment, manageable debt, and a strong housing payment history may present a very different situation from someone with the same score and recent serious delinquencies.
That’s why I prefer to evaluate the entire financial picture rather than focusing on one number.
Can You Get a Mortgage Without a Credit Score?
This is one of the most misunderstood situations in mortgage lending.
Having no credit score isn’t the same thing as having bad credit.
You might have paid your bills on time for years but simply haven’t used enough traditional credit accounts to establish a score.
Depending on the mortgage program, lenders may be able to evaluate alternative credit references.
These can include acceptable documentation of:
- Rent or housing payments
- Utility payments
- Insurance payment histories
- Other qualifying recurring financial obligations
Not every lender accepts the same alternative credit documentation, and not every loan program permits it.
But a missing traditional credit score doesn’t automatically mean homeownership is out of reach.
What Is Manual Underwriting, and Can It Help?
Most borrowers today are evaluated using automated underwriting systems.
These systems analyze credit, income, debts, assets, and other information to help determine whether a mortgage meets applicable requirements.
But automated underwriting isn’t the only option.
Certain mortgage programs allow manual underwriting, where an underwriter evaluates the application under specific program guidelines.
Manual underwriting may be helpful for borrowers with limited credit histories or circumstances that don’t fit standard automated approval requirements.
However, manual underwriting is not a way to ignore credit problems or bypass program rules.
It can involve stricter debt-to-income limits, additional documentation, reserve requirements, and closer review of payment histories.
I believe the key is understanding when manual underwriting is appropriate and which lenders are willing to offer it.
Why Do Some Mortgage Companies Turn Down Borrowers That Others Approve?
Here’s something most consumers don’t realize.
A lender can impose stricter requirements than the basic mortgage program requires.
In the mortgage industry, we call these additional restrictions lender overlays.
Let’s say two lenders offer FHA loans.
One lender may require a minimum credit score of 620.
Another may consider eligible borrowers with a score of 580.
A third may offer a specialized option for certain borrowers below that level.
They’re all originating mortgages, but they aren’t necessarily operating under identical requirements.
This is one of the reasons I believe working with a mortgage broker can be beneficial.
Rather than being limited to the products of one financial institution, I can compare options among my network of more than 300 lenders.
The goal isn’t simply to get someone approved. It’s to find financing that makes sense for their financial situation.
Can VantageScore or Alternative Credit Scoring Help You Qualify?
You may have heard about FICO, VantageScore, and other credit scoring models.
Different scoring models can produce different results because they use different methodologies.
The mortgage industry is also evolving in how credit scores are evaluated.
However, not every mortgage program or lender accepts every scoring model. The score you see in a consumer credit app may not be the score a mortgage lender uses.
Where an approved lender and mortgage program permit an alternative scoring model, that option may be worth exploring.
The important thing is to work with someone who understands which scoring models are currently accepted and how the lender’s requirements apply to your application.
Contact me today for a free mortgage pre-approval consultation. I’ll walk you through the new options, check if VantageScore could help your scenario, and create a custom strategy to get you into your first (or next) home in the Dallas-Fort Worth area.
Five Things You Can Do to Improve Your Chances of Mortgage Approval
If you’re concerned about your credit, here’s where I would start.
1. Don’t assume your credit score automatically disqualifies you.
Before spending months trying to improve your score, have an experienced mortgage professional review your circumstances. You may already have options.
2. Review your credit reports for errors.
Incorrect balances, duplicate accounts, and inaccurate late payments can affect your credit profile. Dispute genuine errors through the appropriate credit reporting agencies.
3. Be careful about opening new credit accounts.
Taking on additional debt or making major purchases before applying for a mortgage can change your qualifications.
4. Keep your housing payments current.
Your recent housing payment history can be particularly important, especially when manual underwriting is involved.
5. Develop a plan based on your actual mortgage qualifications.
Sometimes the best approach is to apply now. Other times, paying down a particular debt, correcting an error, or establishing additional payment history can make a meaningful difference.
The right strategy depends on your individual situation.
Is It Better to Wait Until Your Credit Score Improves?
Not necessarily.
Waiting can make sense if improving your credit would help you qualify for substantially better financing or if you’re not financially ready for homeownership.
But waiting simply because someone told you that you need a 700 credit score may not be necessary.
I prefer to compare the options available today against the potential benefits of waiting.
For example, if a borrower can qualify now but might receive better pricing after reducing credit card balances, we can evaluate both scenarios.
That way, the decision is based on real numbers instead of guesswork.
Frequently Asked Questions About Buying a House With Bad Credit
Can I buy a house with a 550 credit score?
Possibly. FHA guidelines allow certain borrowers with scores between 500 and 579 to be considered with at least 10% down, but lender restrictions and other underwriting requirements apply.
Can I get an FHA loan with bad credit?
Potentially. FHA financing is designed to serve a broad range of qualified borrowers, but approval depends on more than the credit score.
Can I get a VA loan with a low credit score?
Possibly. The VA doesn’t establish a universal minimum credit score, but lenders evaluate creditworthiness and may impose additional requirements.
Can I buy a house with no credit history?
Certain mortgage programs permit alternative or nontraditional credit evaluation. The documentation and eligibility requirements depend on the program.
Will shopping multiple mortgage lenders hurt my credit?
Mortgage credit inquiries made within an applicable rate-shopping window are generally treated as a single inquiry by certain scoring models. The precise window depends on the model. An experienced mortgage professional can help explain how credit inquiries may affect your situation.
Can I buy a house after bankruptcy or foreclosure?
Possibly. Different mortgage programs have waiting periods, eligibility rules, and exceptions. The timing and circumstances matter.
Can I buy a home in Texas with bad credit and little money down?
Potentially. FHA, VA, certain conventional programs, and eligible down payment assistance options may help qualified borrowers. The right combination depends on your credit, income, location, and program eligibility.
My Advice After More Than 25 Years in Mortgage Lending
I’ve been helping people finance homes for more than 25 years, and one thing hasn’t changed.
Every borrower has a different story.
Some people have excellent credit but complicated income.
Others have good jobs and stable finances but have experienced a divorce, medical expenses, a business setback, or another event that affected their credit.
I don’t believe those situations should be evaluated based on a credit score alone.
My job is to understand your circumstances, explain your options, and help you make an informed decision.
And if you’re not ready to qualify today, I’ll tell you what needs to change so you have a clear path forward.
Before you give up on buying a home because of your credit score, let’s have a conversation. You may have more options than you realize.
Richard Woodward
Branch Manager | NEXA Lending
NMLS #217454 | Company NMLS #1660690
Serving Plano, Frisco, McKinney, Dallas, and homebuyers throughout Texas.
Call: 214-945-1066
Mortgage programs are subject to borrower qualification, lender requirements, and program availability. Not all applicants will qualify. This article provides general educational information and is not a commitment to lend.
