Can I Buy a House with a 600 Credit Score in 2025?

How to buy a house with a 600 credit score

If you're wondering, "Can I buy a house with a 600 credit score?" the answer is yes.

Many lenders offer loan programs that cater to buyers with a 600 credit score, provided you have a steady income and can comfortably manage mortgage payments.

Finding the right 600 credit score home loan can help turn your homeownership dream into reality.

In this article (Skip to...)

• Qualifying with low credit
• 600 credit score home loans
• How 600 scores affect rates
• Improving low scores
• FAQ

Can I buy a house with a 600 credit score?

Yes, you can qualify to buy a house with a 600 credit score. In fact, there are several loan programs specifically tailored to help people with lower credit scores.

But this doesn’t mean everyone with a low score can qualify for a mortgage. You'll have to meet other standards set by lenders, too.

• Lenders must verify your income and confirm your ability to afford a mortgage payment. If you’re self-employed, you may have to submit bank statements or evidence of steady income.
• Typically, you must be employed for at least two consecutive years to qualify for a home loan. Although there are some exceptions to the two-year job history rule.
• Your credit history must be good, too. This means no late payments or negative information has been reported to the credit bureaus within the past 12 months.
• Your existing debt-to-income ratio can't be too high. To qualify for a mortgage, your total debts, including the future home loan, typically need to be under 45% of your pre-tax income.

Your debt-to-income ratio (DTI) is your monthly debt obligations as a percentage of your gross monthly income.

Example: If you make $5,000 a month before taxes and have $750 worth of monthly debt repayments, your DTI is 15%. This is calculated by dividing your total monthly debt payments ($750) by your gross monthly income ($5,000), resulting in 0.15, or 15%. Debts that count toward your DTI include minimum credit card payments, auto loans, student loans, and other recurring obligations.

If you meet these other criteria, you should be able to accomplish the dream of homeownership and buy a house with a 600 credit score. You just have to choose the right mortgage loan program.

Types of 600 credit score home loans

There are several 600 credit score home loans available to both first-time home buyers and repeat borrowers. These options include government-backed loans, such as FHA and VA loans, which are designed to offer more flexible qualification criteria.

FHA loans

VA loans

VA loans are mortgages guaranteed by the U.S. Department of Veterans Affairs and designed to offer long-term financing to eligible American veterans, active-duty service members, and their surviving spouses. 

VA home loans don’t have a minimum credit score requirement, so it’s possible to get this type of loan and buy a house with a 600 credit score. However, lenders are allowed to set their own minimums, which typically range between 580 and 660. 

Moreover, this type of mortgage does not require a down payment, and it also tends to have competitive mortgage interest rates. In order to qualify, you’ll need a Certificate of Eligibility (COE). Your lender can acquire one for you online, usually in a matter of minutes. Eligible borrowers will also need to pay a one-time VA funding fee, which is usually rolled into the loan balance.

USDA loans

USDA loans are guaranteed by the U.S. Department of Agriculture and have the advantage of having no down payment requirement. To be eligible, you must meet household income limits and purchase a home within a rural area designated by the USDA. Borrowers also have to pay for mortgage insurance, which consists of an annual fee as well as an initial guarantee fee.

Each lender has different credit score requirements for USDA loans. So, if you locate one that accommodates your credit history, you can feasibly get a USDA loan with a 600 credit score.

Non-Qualified mortgages

Non-qualified mortgages (Non-QM) are home loans that do not meet the Consumer Financial Protection Bureau’s (CFPB) rules for a qualified mortgage. These loans cater to borrowers with unique income-qualifying circumstances, such as self-employed individuals, real estate investors, or those with significant assets. 

Non-QM loans may have more flexible income requirements and higher interest rates to offset the added risk. Banks that have the resources to set up and maintain their own distinctive mortgage programs are typically the ones that offer non-QM loans. 

You can look for one on your own or work with a mortgage broker who can recommend loan products that you're likely to qualify for with a 600 score.

Importance of credit scores in home buying

Credit scores play an important role in the mortgage approval process and can significantly impact your interest rates. Here's why they matter:

1. Mortgage approval: Lenders use your credit score to assess the risk of lending to you. A higher credit score generally indicates lower risk, making it easier to qualify for a mortgage loan and potentially get preapproved.
2. Mortgage interest rates: Your credit score directly affects the interest rates offered by mortgage lenders. A higher credit score typically results in lower interest rates, which can save you thousands of dollars over the life of the loan and may improve your chances for refinancing in the future.
3. Loan types: Different types of mortgages have varying minimum credit score requirements. Your 600 credit score limits the types of loans available to you, potentially excluding you from a conventional mortgage.

While a 600 credit score is considered fair and may limit some options, it doesn't necessarily preclude you from buying a house. Many borrowers with a 600 credit score can still qualify for FHA loans or other government-backed loan programs designed to help first-time home buyers and those with lower credit scores.

Breakdown of FICO score ranges

A higher credit score of 720 or greater will typically qualify you for the lower mortgage interest rates you see advertised. Here’s a general breakdown of FICO credit score ranges, which are most commonly used by lenders in the United States:

• Excellent: 800 to 850
• Very good: 740 to 799
• Good: 670 to 739
• Fair: 580 to 669
• Poor: 300 to 579

Key factors influencing your credit score

A credit score is a numerical representation of your creditworthiness, typically ranging from 300 to 850. Your FICO score, the most commonly used scoring model by mortgage lenders, is calculated based on information in your credit report from the three major credit bureaus: Experian, Equifax, and TransUnion. These scores are key during the underwriting process when lenders evaluate your loan application.

1. Payment history (35%): Timely payments on credit cards, loans, and other debts.
2. Credit utilization ratio (30%): The amount of credit you're using compared to your credit limits.
3. Length of credit history (15%): How long you've had credit accounts open.
4. Credit mix (10%): The variety of credit types you have (e.g., credit cards, personal loans, mortgages).
5. New credit (10%): Recent credit applications and new accounts opened.

Understanding these factors can help you improve your credit score over time, potentially increasing your chances of qualifying for a home loan with better terms. Remember to factor in closing costs when budgeting for your home purchase, as these can significantly impact your overall expenses.

How a 600 credit score affects your mortgage rate

Do you find yourself asking, "Can I buy a house with a 600 credit score?" Well, the straightforward answer is yes. However, a credit score of 600 comes with certain financial implications, particularly when it comes to your mortgage rate. 

Generally, the lower your credit score, the higher the interest rate you'll likely face. This means higher monthly payments and a larger total amount paid in interest over the life of the loan.

When you aim to buy a house with a 600 credit score, your credit rating has a direct influence on your mortgage rate. This impact comes from what the industry calls "loan-level price adjustments" (LLPAs). These are risk-based fees that lenders usually add to the interest rate for borrowers with less-than-stellar credit scores or small down payments.

How do higher interest rates affect the cost of borrowing? Let’s look at how much interest you’ll pay over the life of the loan when borrowing $400,000 with a 30-year fixed-rate loan.

Calculations are approximations and do not include property taxes, homeowners insurance, or other fees.

So, while buying a home with a 600 credit score is certainly possible, understand how a low credit score can influence the terms and overall expenses of your mortgage.

“Ask your loan officer if they have any ideas around increasing your credit score; they may be able to help you quickly boost your scores to help you get a better rate.”

— Jon Meyer, loan expert

The best mortgage choice will vary by person, so it's important to compare all your loan options before buying.

How to improve your credit score

If you're asking yourself, "Can I buy a house with a 600 credit score?" the answer depends on several factors—but improving your credit can make homeownership more achievable. Taking small but strategic steps now can boost your score and open up better mortgage opportunities.

Here are some quick tips:

• Pay bills on time. Late payments hurt your credit score, so prioritize credit cards and loans to avoid major impacts.
• Reduce debt. Keeping credit card balances below 30% of your limit improves your score; paying off debt entirely is even better.
• Fix errors. Check your credit report regularly for mistakes and dispute any inaccuracies to prevent score reductions.
• Get a credit-builder loan. Offered by banks and credit unions, these loans help establish a positive payment history.
• Become an authorized user. A family member's good credit habits can reflect positively on your credit report.
• Keep accounts open. Length of credit history matters, so maintain older credit lines even if used infrequently.
• Limit credit applications. Too many inquiries can lower your score and impact your mortgage eligibility.
• Consider rapid rescoring. Your lender can update your credit quickly to reflect recent payments or error corrections.

Following these steps can help raise your credit and move you closer to homeownership.

Mortgage loan options for 620 credit scores or higher

Curious about the type of home loan you can get with a good credit score? If you're working with a score above 600, you've got more options that could make your homeownership aspirations a reality. 

Let’s take a closer look at some popular loan options available for borrowers with credit scores of 620 and above.

• Conventional loans: These loans may have stricter qualifying requirements, but they offer lower overall costs and are ideal for individuals with higher credit scores above 620. Furthermore, down payments under 20% require private mortgage insurance (PMI), which is eliminated once you reach 20% equity.
• Fannie Mae HomeReady: This program is designed for low-income borrowers who have a credit score of at least 620. It also offers a minimal down payment of 3%. Household members' income can be included for qualification, making it easier for people from diverse financial backgrounds to qualify.
• Freddie Mac Home Possible: Individuals with higher credit scores of 660 or greater can qualify for this loan, which also provides the benefit of a low 3% down payment option. This opportunity is only available to first-time home buyers and is not accessible to repeat or second-home buyers.

FAQ: 600 credit score home loans

Next steps: Find the best mortgage loans for a 600 credit score

To recap, a 600 credit score is high enough to qualify for a few different types of mortgages. But credit isn't the only thing that matters.

Before approving you to buy a house, a lender also needs to verify your employment status, income, and debt-to-income ratio to ensure you can make monthly payments on your mortgage. So the best way to find out whether you can buy a house with a 600 score is to check in with a few lenders.

Applying with a lender is usually free, and it will give you a concrete idea of whether you qualify for a home purchase. Begin the process by clicking the links below.