Having a high credit score has plenty of perks. Higher credit limits and lower interest rates on loans and credit cards are one of many reasons why people try to improve their credit. But what happens if the score is at the bottom edge of the spectrum? A 600 credit score is less than ideal, but does that completely shut you out of the housing market? Explore whether you can buy a home with that score and what loan options are available.
Can I buy a house with a 600 credit score?
To answer your questions, yes, you can buy a home with a 600 credit score. Lenders don’t just look at your trust. They also take into account your income, employment history, debt-to-revenue ratio, and your ability to make consistent mortgage payments. It could be approved if it provides evidence of a stable income stream and demonstrates that it is possible to afford regular mortgage payments.
The key is to find a loan program you qualify for, and it suits your needs. With proper preparation and loan types, homeownership is still within reach.
What credit score do you need to buy a house?
The credit score required to qualify for a mortgage depends heavily on the loan program itself. Each loan type has its own set of requirements and thresholds that you must meet to qualify. The table below analyzes some of the most common types of loans, as well as the credit scores you need to qualify for.
Loan Type Minimum Credit Score Traditional 620 FHA Loan 500 (10% decrease) or 580 (3.5% decrease)
FHA loan
FHA loans are one of the most popular options for buyers with low credit scores. To qualify, you will need a 3.5% down payment to score at least 580. If you can lower your score by 10% or more, you will need a low score of 500. This loan type is also for first-time home buyers.
VA loan
If you wish to obtain a VA loan, you must be a veteran or active service member. The VA itself does not charge a minimum credit score, but the lenders that cooperate with them have their own policies, and in many cases they require a score of at least 620.
USDA loan
Low to moderate income borrowers in rural areas are intended beneficiaries of USDA loans. Your household’s adjusted gross income must be less than 115% of the median total income for your area. Typically, you need a credit score of at least 620 to qualify, but you can get approved with a lower score.
How does my credit score affect my ability to buy a home?
A high credit score will let your lenders know that you are a responsible borrower who can pay off your debts on time. A higher score suggests you are a responsible borrower who pays your debts on time.
Meanwhile, a low credit score, such as 600, is a riskier bet for lenders. To offset that risk, lenders may charge higher interest rates. This could increase the total monthly payment and loan costs.
What kind of loan can I get with a credit score of 600?
As shown in the table above, traditional loans will be difficult to get with a credit score of 600, but that doesn’t mean that your dream of buying a home is out of reach. FHA, VA, and USDA loans are all within the range of borrowers with a credit score of 600.
Non-QM loans that cater to borrowers who do not meet traditional loan requirements are usually another option for those with low credit scores. Keep in mind that these loans tend to have lower minimum payments and higher interest rates.
FAQ about buying a house with a 600 credit score
Is 600 a good credit score?
A 600 credit score is in the “fair” range. It’s not considered good, but it’s not the worst either. You still have the option to get a mortgage.
What is considered a good credit score?
“Good” scores are everything between 670 and 739. A score within this range will lower your mortgage rate.
Can I buy a house that I’m not trusted?
It may turn out to be a little more difficult, but it’s not impossible to buy a house with poor credit. There are several loan programs that cater to borrowers with lower credit scores, but they have a higher mortgage rate.
