To keep it short and sweet: credit scores can be a pain in the a$$. A missed payment or two, personal debt, and other factors can lower your score and make it trickier to get financing for large important purchases. We’ve all been there. In fact, 16% of Americans currently have poor credit scores. Now, does that actually make buying a home more difficult? Not necessarily, especially when you partner with a builder like NHC that specializes in bringing the lowest prices per square foot to the market.

Securing low credit score loans might be easier than you think—especially when it comes to getting a mortgage. Although navigating today’s housing market may seem challenging, there are still great options available for buying a house with bad credit, even if your score is not as high as you’d like. For example, your buying power for a newly constructed NHC home, where prices start at just the $100s, will be a lot higher than an overpriced condo in the city. In this guide, we’ll break down several options to consider when shopping for a mortgage, including how NHC homes could help make the financing process even easier for you and your family.

Conventional Loan

Not what you expected? While conventional home loans may not be thought of as realistic low credit score loans, you may still qualify. In fact, they could be easier to secure than you think when you’re able to leverage NHC’s low home prices to meet down payment requirements. Lenders typically prefer borrowers with higher credit scores, but some are willing to work with those who are buying a house with bad credit. The important thing to keep your eye on when shopping for a conventional home loan is what your interest rate would be. Conventional loans require a credit score of 620 or higher, so those with scores at the lower end of this range could focus on higher down payments upfront to potentially avoid higher interest rates.

FHA Loan

If your credit score is below 620, you’re still alive. FHA loans, backed by the Federal Housing Administration, are often a better option for those buying a house with bad credit. FHA loans typically feature more lenient credit requirements, allowing borrowers with scores as low as 580 to qualify with a down payment of just 3.5%. For those with scores between 500 and 579, a 10% down payment may still secure a loan. This gives you a more flexible, low-credit-score home loan option. When buying an NHC home, the down payments should be much easier to budget, as we list every property at the lowest price per square foot you can find!

One difference between FHA loans and conventional loans, however, is mandatory mortgage insurance, meaning you will need to pay an additional fee each month along with your mortgage payment.

Loans From Home Builders

Another potential option for borrowers who are buying a home with bad credit is to get a loan through a home builder such as NHC Mortgage. These alternative financing options could give you more flexibility when buying a house with bad credit. And like we’ve mentioned, we offer homes at the lowest price per square foot on the market, and we help all types of home buyers secure financing that they can afford. When you choose to finance your new construction home with NHC Mortgage, you’ll have access to a loan officer who will help you find the right financing for your financial goals and needs. Additionally, your new home deposit will be ONLY $95, making the process of going under contract that much easier. Not bad, right? Check out our mortgage calculator to get a better idea of what your monthly payments may look like.

Tips for Buying a House with Bad Credit

We now know what loan options are available. So, let’s talk about some steps you can take to become more competitive when buying a house with bad credit.

Save for a Larger Down Payment

When buying a home with bad credit, one of the best ways to get a more favorable interest rate from a lender is through your down payment. A larger down payment reduces the lender's risk and can improve your chances of loan approval. An easy way to solve this is to find a home that is fairly priced. At NHC, we’re putting affordable homes back on the map, empowering prospective home buyers to flex their muscles in a market full of overpriced condos. Aim for at least 20% to avoid monthly private mortgage insurance payments.

Take Steps to Boost Your Credit Score

Simply put, the higher your credit score, the better mortgage terms you’ll likely receive. Paying down existing debts, avoiding taking on new credit, and ensuring all bills are paid on time are great ways to raise your score before applying for a mortgage. And if you’ve already signed a mortgage, you can always refinance your low credit score loan at a later time to lower your monthly payments. The phrase, “Date the rate, marry the home,” is something you’ll likely hear from mortgage specialists when purchasing a home.

Get Pre-Approved

Another potential option when buying a house with bad credit is to get pre-approved for your loan. Why is this smart? It can help you better understand your options to find a lender more accommodating to your credit situation. Pre-approval could also give you a clear picture of how much you can realistically afford to avoid overpaying for a home.

Find a Co-Signer

If you’re buying a house with bad credit and are worried about the possibility of high interest on your mortgage, you could also consider a co-signer. Someone like a family member or friend who has better credit could join your mortgage application to help you get more favorable terms. NHC homes help you and your family build immediate equity with our affordable prices, so who wouldn’t want a piece of the pie?

Consider New Construction Homes

While many may look into rent-to-own when buying a house with bad credit, new construction homes from NHC offer a chance to be your own landlord instead of paying someone else’s mortgage every month—all without the stress & unforeseen expenses associated with buying a pre-owned home. With home options as little as $79 per square foot, you could achieve homeownership at a price that’s actually affordable for the square footage you want and need. Explore our available homes across Texas, Alabama, Florida, and North Carolina today.

FAQs

Can you buy a house with no credit?
Yes, it is possible, although finding the right home may be challenging. To buy a house with no credit, you could pay with cash or consider no-credit home loans with a co-signer.

How can I buy a house with bad credit?
Buying a house with bad credit may be easier than you think. There are several options for securing a home loan, including conventional loans, FHA loans from the government, or even loans directly from a new construction home builder like NHC.