If your credit score is less than stellar, you may already be familiar with the struggles it brings along. Bad credit can make you jump through hoops to achieve what should otherwise be a straightforward process, like buying a home. In other words- opportunity doesn’t come knocking on your door often. In fact, it usually slams the door in your face. 

Don’t worry- your low credit score won’t banish you to a bleak existence in your tiny, old apartment. Buying a home with bad credit can present its own set of challenges, but it’s certainly not out of the question.

Luckily, to sell your home you won’t need to worry about these certain obstacles. And though the process of buying is much more complex, we’ve got you covered. Just follow the five steps below.

1. Check Your Credit

First of all, you should know what you’re getting yourself into before you even get started. Knowing your credit report will give you the power to negotiate deals as well as set realistic goals and expectations. 

Just don’t go overboard on the checking- every time you or anyone else requests your score, it actually drops a little. It’s counterintuitive, yes, but credit checks are a necessary evil in the homebuying process. 

Equifax, Experian, and TransUnion are the three credit companies that get checked each time someone runs your credit background. Your score can vary slightly between the three, so it’s best to confirm them all before beginning your house hunt. 

2. Find a Cosigner

If you’ve ever tried to lease a car, rent an apartment, or even get approved to finance some fresh new tires on bad credit, you already know the power of a cosigner.

Leasing agents will be more confident in you if a person they deem more trustworthy (someone with a higher credit score) puts themselves on the line, too. This could be a spouse, parent, sister, or even coworker or friend. It doesn’t matter how you know them. What does matter is that you stay on top of your mortgage payments. Because if you sink, they’ll sink with you, and the only thing worse than losing a house is losing a trusted friend along with it. 

3. Offer Higher Interest Rates on Mortgage 

Buying a home with bad credit doesn’t come without its unique set of downsides. A low credit score can lower your credibility to a lender, so you’re going to have to compromise for that in order to stand out in an already competitive playing field. 

One way for you to do so is by offering to pay higher interest rates on your mortgage. 

Lenders are weary of working with people with bad credit because they assume they’ll make their payments late or miss them completely. A higher interest rate will offer the lender protection from what they deem a potentially high-risk investment. 

4. Offer a Larger Down Payment 

Similar to the last point, you can overcompensate for your bad credit by offering to pay more money upfront for your desired home. Money talks, and people are willing to listen when cold, hard cash is on the table. 

In addition to the fiscal incentive, providing a higher down payment sum shows that you’re serious and  dedicated to this commitment for the long run. 

Exactly how much more do you need to spend? It’s generally recommended to offer 20% or more of the total home price. If that number scares you, it shouldn’t- there are resources out there for down payment assistance

5. Find the Right Lender

Most traditional conventional loans won’t be available for those in the bad credit bracket. Instead, non-conforming loans are the go-to option if you’re struggling with an undesirable FICO score. The thing is, these types of loans often require higher rates and extra fees.

Regardless, it’s best to investigate and see for yourself what’s available for your distinct situation in your particular location. Call banks, mortgage lenders, and credit unions in your area to develop the best plan of action for yourself. 

Sometimes with low credit scores the best option is with the government-run Federal Housing Administration. FHA loans ask for a small down payment of 3.5% of your total home price with a score of 580 or above; with a score of 500-579 it becomes 10%. While this type of loan is run by the FHA it is actually funded by private mortgage lenders, meaning costs can still be hefty and binding. 


If you’re struggling with your credit, it might be best to have the patience to get it higher. Better scores equal better deals, which ultimately means more money in your pocket. But that can be a slow process, and if for whatever reason you need to move in a hurry, be sure to keep these guidelines in mind when buying a home with bad credit. Following these tips can potentially make or break your home buying deal. Best of luck!