What's a credit score? | How to check your credit score | 4 mortgage loans for a 600 credit score | How your credit score affects getting a mortgage | What lenders look for | Additional mortgage options | Tips for boosting your credit score
💳 Can I buy a house with a 600 credit score? 💳
Yes, it’s possible to buy a house with a 600 credit score. Lenders look at your credit score as a risk indicator. Although 600 is considered "fair" by most standards, it doesn't mean you can't buy a home.
However, lenders like higher credit ratings. It shows you’re more likely to make loan payments and less likely to default on your loan.
If you’re buying a house, your first step is to check your credit score. Higher credit scores can increase your chances of getting approved for a home loan.
But what if your credit score isn’t as great as you thought? You can buy a home with a credit score of 600 — but your mortgage options will be more limited.
Whether you want to boost your credit score or find a mortgage you'll be approved for, read on to learn how your credit score will impact your homeownership goals.
And if you're ready to begin your home buying journey, our friends at Clever Real Estate can help. Clever is a free, no-obligation agent matching service that introduces you to top-rated real estate agents in your local area.
Best of all, buyers in most states can receive up to 0.5% cash back after closing. For a $400,000 home, that puts $2,000 back in your pocket!
What's a Credit Score?
A credit score is an indicator of how likely you are to repay a loan on time. It’s created using information from your credit report. If you have a 600 credit score, it's considered “fair” — just below the average credit score in the U.S., which is 698.
According to the Consumer Financial Protection Bureau, your credit score is made of several factors, including:
- Amount of unpaid debt
- Bill payment history
- Type and number of loan accounts
- Credit history length
- New credit applications
- Whether you have debt in collections, foreclosure, or bankruptcy
Credit scores generally range from 300 to 850 and fall into four brackets for creditworthiness:
800 to 850
740 to 799
670 to 739
580 to 669
How to Check Your Credit Report for Free
Keeping tabs on your credit is crucial if you’re thinking of applying for a home loan.
Check your credit report for free through AnnualCreditReport.com. It shows your credit history from all three major credit bureaus (Experian, Equifax and Transunion).
4 Mortgage Loans for a 600 Credit Score
1. FHA Home Loan
FHA can issue loans if your credit score is as low as 500, but you must have a down payment of at least 10% to qualify. If your score is at least 580, you have more flexible financing options.
However, FHA loans require PMI if your down payment is 10% or less. It makes borrowing with an FHA loan more expensive because you must pay PMI for the life of the loan. You’ll pay an upfront cost as part of your closing costs and an annual premium. It can’t be removed unless you refinance your home using a different loan program.
2. VA Home Loan
VA loans are a government-backed loan program through the Department of Veterans Affairs. Only veterans, active duty service members, and surviving spousesare eligible for VA loans.
The VA does not have a minimum credit score requirement, but private lenders can set their own. You also won’t pay a down payment unless the lender specifically requires it.
3. USDA Home Loan
The U.S. Department of Agriculture backs USDA loans. You don’t need a down payment, but some lenders require a minimum credit score of 640. The program also has maximum income requirements because it’s designed to help low- to moderate-income families buy homes in rural areas.
4. Non-Qualified Mortgage
A non-qualified mortgage (non-QM) is available to people whose income fluctuates and doesn’t meet strict conventional loan requirements. It can be a good option for self-employed applicants.
How Your Credit Score Impacts Your Ability to Get a Mortgage
From a lender's perspective, a credit score measures a borrower's potential riskiness. Lenders can set their own credit score requirements for different loan types.
Lenders have a few options for an applicant with a lower credit score. They can deny your mortgage application, restrict you to specific loan programs, or charge higher fees and interest rates to help compensate for the risk of issuing a mortgage.
For example, FHA loans usually have a lower credit score requirement, increasing your approval chances. But FHA borrowers pay mortgage insurance as part of their monthly payment. Mortgage insurance, often called private mortgage insurance or PMI, protects the lender if you stop making payments on your loan.
What Lenders Look for on a Home Loan Application
A credit score isn’t the only thing lenders look at. Before issuing a loan, you’ll go through different stages of home financing. This process helps the lender feel confident that you have a reliable income to repay the loan.
For example, your lender must verify your income to determine how much home you can afford. Most require you to have at least a two-year employment history.
Lenders also consider the ratio of your debt to income (DTI) — a measure of the amount of your monthly income paid toward debt payments.
A higher DTI indicates you spend a large chunk of your income on debts, leaving less room to pay a mortgage.
Better Mortgage Options for Slightly Higher Credit Scores
Fortunately, you can also access new, better home loan options with as little as a 20-point increase in your credit score.
A 620 or higher credit score means you can qualify for a conventional home loan. Conventional loans have lower borrower costs because you can typically qualify for lower interest rates. You can also ask your lender to cancel PMI once you have at least 20% equity built up.
If you borrow through a Fannie Mae and Freddie Mac conventional loan program, you can pay as little as 3% down.
6 Tips to Boost Your Credit Score
You can get a house with a 600 credit score — but boosting your credit score improves your likelihood of being approved for a home loan and getting a lower interest rate.
A better credit score can also save you money in other surprising ways, like lower auto insurance premiums, more affordable car loans, setting up utility accounts, and landing a job.
Here are six ways to boost your credit score:
- Check and correct errors on your credit report
- Pay bills on time
- Pay down existing debts
- Keep older accounts open
- Limit new credit applications
- Get a credit-builder loan
Whether you're building your credit or buying a home, we understand that every dollar counts. That's why we recommend our friends at Clever Real Estate, a real estate company that helps you get great service and major savings.
With Clever, it's easy to interview top-rated real estate agents from brokerages like Keller Williams, Century21, and RE/MAX. You'll get paired with qualified agents for free, then interview as many as you like until you find the best match.
In most states, you'll even get thousands back after closing. Clever Cash Back gives you 0.5% cash back, which you can use however you'd like.
👋 Next Steps: Talk to an Expert
If you're weighing your options for buying or selling a house, our friends at Clever Real Estate can help! Clever's licensed concierge team is available to answer your real estate questions, or help you find the right agent for your needs.
Can I buy a house with a 600 credit score?
The simple answer is yes — but your options for mortgages will be much more limited. There are four main types of mortgages you can qualify for with a low credit score, but if you can, we recommend trying to raise your credit score to at least 620. This will allow you to qualify for much better options.
What is a credit score?
A credit score is an indicator of how likely you are to repay a loan on time. It’s created using information from your credit report. If you have a 600 credit score, it's considered “fair” — just below the average credit score in the U.S., which is 698. Learn expert tips for raising your credit score.
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