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For many renters, homeownership feels like something that happens to other people. The truth is that many first-time homebuyers purchase homes with credit scores around 600. The path may require preparation, but it is achievable.
Challenge #1: Credit Score. FHA loans may allow borrowers with credit scores as low as 580 to qualify with 3.5% down, and some borrowers with scores between 500-579 may qualify with a larger down payment.
Challenge #2: Down Payment. Many buyers do not need 20% down. FHA programs and assistance programs can help qualified buyers.
Challenge #3: Debt. Paying down revolving debt and lowering credit utilization can improve mortgage eligibility.
If your score is below 500, focus on correcting credit report errors, making all payments on time, reducing balances, considering a secured credit card, and reporting eligible rent and utility payments.
Homeownership may be closer than you think. Speaking with a lender and real estate professional can help you create a plan.
Sources
HUD FHA Credit Score Requirements
