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One of the first things you’ll learn about buying a home is that you need the following things to secure a mortgage: good credit, stable income, and minimal debt. If you’ve got bad credit, don’t despair! We’re here to help!

What is the first step of buying a house with bad credit?

One important thing to remember is that when a lender looks at your mortgage application, they won’t just look at one factor, they consider the entire application wholly. So if you’ve got a bad credit score or a slightly higher debt-to-income ratio- it won’t necessarily count you out.
The very first thing you should do if you have bad credit and are trying to secure a mortgage is to get an official mortgage preapproval. Your pre-approval will not only show what your current score is, but give you an idea of what your mortgage options are, and a roadmap to improve your credit score. This should be done as soon as you begin thinking about buying a home. It's never too early to get started!

What is the lowest acceptable credit score to buy a house?

This completely depends on what type of mortgage you’ll be seeking out, but for conventional mortgages, the minimum sits at 620. However, there is an exception to this rule for other loan types such as FHA loans and VA loans. These loans can approve a borrower with a credit score as low as 500. The caveat with these types of loans is that while they are insured by the government and can set recommendations for lenders, the lender still gets to decide its own parameters for acceptance. So all in all, we recommend a credit score of around 580-620.

Best mortgage lenders for those with bad credit

Most lenders have great options for those with different needs, especially those with bad credit scores. Our top three are as follows:

Rocket Mortgage

Rocket Mortgage has options for conventional loans, FHA loans, and VA loans. It takes only a few minutes to gain preapproval, and each borrower receives a customized mortgage rate. Rocket Mortgage will consider loans for borrowers with credit scores as low as 580-620

Citi Mortgage

Citi mortgage, like Rocket, has options for conventional, VA, and FHA loans. Borrowers can choose between fixed-rate or adjustable-rate mortgages. Depending on your qualification- you can be approved for a down payment as low as 3%. The lowest acceptable credit score for a Citi mortgage is 580.

New American Funding

New American Funding has options for conventional, FHA, VA, and USDA loans. The lowest acceptable credit score for a loan with this lender is 620, and may only require a down payment of 3%.
Some additional resources for mortgages for borrowers with less-than-perfect credit scores are here!

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