While buying a house with poor credit is possible, it is important to understand the long-term financial implications. A lower credit score almost always translates to a higher interest rate. Over the life of a 30-year mortgage, a difference of even 1% or 2% in your interest rate can cost you tens of thousands of dollars in extra interest.
: Insured by the Federal Housing Administration, these are the most popular option for buyers with poor credit. You can qualify for an FHA loan with a credit score as low as 500 if you can put down 10%. If your score is 580 or higher, the down payment requirement drops to just 3.5%.
: Showing that you have several months' worth of mortgage payments saved in the bank after closing proves you can handle financial emergencies without defaulting.
Ultimately, buying a house with poor credit is a viable option if you leverage government-backed loans and maximize your other financial strengths. However, the most financially sound approach is often to wait, actively build your credit, and secure a much better interest rate that will benefit you for decades to come.