How to get a mortgage with a credit score of 600

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If you want to get a mortgage but your credit score needs improvement, you might be thinking that home ownership is out of reach. But you don’t need perfect credit to get a home loan. It is possible to get a mortgage with a credit score of 600.

Check out some of the home loan programs with flexible credit requirements – and how you can improve your credit score for better terms:

Can I buy a house with a credit score of 600?

A credit score of 600 is high enough to get a home loan. In fact, there are several mortgage programs designed specifically to help people with lower credit scores. However, you will also need to meet other loan requirements. For example, the lender will check your debt-to-income ratio (DTI), verify your employment, and review your credit history. You may also need to make a deposit.

A lower credit score also means that you will have higher borrowing costs because the lender is riskier. These costs usually come in the form of mortgage insurance premiums and higher interest rates.

Mortgages for a credit score of 600

If you are looking for a home loan with a credit score of 600, check out these programs:

FHA home loan

FHA home loans are mortgages insured by the Federal Housing Administration. Government support removes some of the risk for lenders, so people with lower credit scores and smaller down payments may qualify.

If you have a credit score of 580 or higher, you will only have to pay 3.5% of the purchase price of the home, while a score of 500 to 579 requires at least 10% down payment. .

You’ll also need to pay for two types of mortgage insurance with an FHA loan: an initial premium and an ongoing fee – called annual mortgage insurance premiums – which are built into your monthly payment. Depending on the amount of your down payment, you will have to pay these mortgage insurance premiums for 11 years or during the term of the loan.

VA home loan

Backed by the US Department of Veterans Affairs, VA loans are intended for veterans, service members, and surviving spouses. You will not pay any down payment and mortgage insurance, but you will have to pay an upfront finance charge of between 1.4% and 3.6% of the loan amount.

There is no minimum credit score requirement for VA loans. The lender sets their own minimum, which means that it is possible to get this type of loan with a credit score of 600.

USDA home loan

USDA Home Loans are non-down payment mortgages guaranteed by the United States Department of Agriculture. To get one, you will need to meet income requirements and purchase a home in a rural area designated by the USDA. Borrowers are also responsible for paying mortgage insurance in the form of an upfront guarantee fee and an annual fee.

Like VA loans, each lender sets their own credit score requirements. It is therefore possible to get a USDA guaranteed mortgage with a credit score of 600, provided you find a lender who is willing to work with you.

Ineligible mortgages

A non-qualifying mortgage, also known as a non-QM loan, is a home loan that does not meet the requirements to be a qualifying mortgage. Non-QM loans are ideal for borrowers with fluctuating incomes, such as the self-employed, and people who cannot meet the stringent requirements of conventional loans.

Ineligible mortgages are typically offered by banks that set up and operate their own unique mortgage programs, such as interest-only home loans. You can research lenders who offer these loans or work with a mortgage broker who can make recommendations.

How to improve your credit score

If you can put your mortgage search on hold for a few months and work on improving your credit, you may be eligible for conventional financing. Or you could get better loan terms that will help you save money.

Here are some ways to improve your credit score:

Make payments on time

Payment history is one of the most important factors influencing your credit scores, so focus on paying all of your bills on time. To avoid missed or late payments, set up automatic payments or set a reminder on your phone a few days before the bill is due. Make sure you have money in your checking account before the payment is also processed.

Advice: If you are at risk of missing a payment, contact the service provider or lender immediately. They may be able to move the due date or work out a payment plan for you while keeping your account in good standing.

Pay off the debt

Paying off unpaid balances reduces your credit utilization rate, which is the amount of credit you use against your available credit. Lower use of credit signals less risk for a lender. In turn, this can help improve your credit scores.

Advice: Try to keep your credit card balances at 30% of your credit limit or less, and pay off loan balances where possible.

There’s another benefit to paying off your credit card debt: it improves your debt-to-income ratio, which measures how much of your monthly income is spent on paying off debt. With a higher credit score and a lower DTI ratio, you improve your chances of qualifying for a home loan.

Don’t close credit card accounts

Credit scores are also based on the length of your credit history, so just keeping credit card accounts open can help keep your credit healthy.

You might have been tempted to close an account if you don’t use it a lot or if it comes with a high annual fee. But you can keep the account active by connecting the card to a small recurring bill and setting up payment reminders.

Advice: Additionally, your card issuer may be able to downgrade the account to a card with lower fees. Just be sure to ask about the changes to your benefits and rewards, and make sure the issuer will report the new card to the credit bureaus as the same account.

Limit new credit requests

Whenever you apply for new credit, whether for a credit card or a loan, the lender reports a serious investigation to the credit bureaus. Plus, the new account can lower the average age of your credit history and increase your debt load. All of these factors can lower your credit score, so always keep this in mind before opening a new account.

Obtain a manufacturer’s loan

A credit building loan is designed to help you build up credit as you make payments. They are usually available from small financial institutions, such as community banks and credit unions.

If you qualify, you don’t get the money up front. Instead, the lender holds it in a savings account and collects your payments (with interest) for the life of the loan. You get the money after the loan is paid off, usually within six to 24 months.

Become an authorized user

With this option, a trusted friend or relative adds you to their credit card account. You get your own copy of the credit card and can make purchases with it, but you don’t have to make any payments. Account activity will be reflected on your credit reports as well as that of the primary account holder.

Having an account in good standing will have a positive impact on your credit, but the reverse is also true. Any late payment or high balance can negatively affect your credit.

Check your credit reports regularly

Your credit scores are based on the information in your credit reports, so it’s a good idea to make sure they don’t contain errors. You are entitled to a free credit report with TransUnion, Equifax, and Experian once a year at If you find an error or signs of identity theft during your exam, you can resolve it with the credit bureau.

About the Author

Kim porter

Kim Porter is an expert in credit, mortgages, student loans and debt management. She has been featured in US News & World Report,, Bankrate, Credit Karma, and more.

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