Ultimate Guide to Buying A House With Bad or Zero Credit


Home purchases have gone through the roof over the last couple of years. In 2021 alone, people purchased over 6.1 million homes. Of course, most of the people who bought those homes also enjoyed good credit.

While those with good credit and great jobs can typically secure a home purchase if they want one, it’s not so easy to buy a house with bad credit or no credit. There are a lot of roadblocks that can the process difficult.

Are you a hopeful homebuyer without great credit? If so, keep reading for our guide to buying a house with bad credit.

Know Your Budget

Before you jump into the process of looking for houses for sale too deep, you should know your budget. Those with bad credit can still get mortgages, but the bank will often put a strict limit on how much they’ll give you.

Pre-qualify for a loan and see what you can realistically secure. Use that as a guide in your search for a new home. While your dream home might remain out of reach, for now, shopping within your budget can help put you into a starter home.

Expect Higher Interest Rates

One of the pitfalls of bad credit is that it makes you look like a risky investment. Banks and other lenders want to hedge their bets. That means they’ll typically offer you a loan with a higher interest rate.

You’ll pay more for that home than someone with good credit would pay for it. On the other hand, a higher interest rate may prove one of the only ways you can get financing.

Work on Your Credit

While you can only do so much if you’re on a short timeline, boosting your credit score can only help. If you can stand a wait of a year or two, though, there is a lot you can do that will make you look better, such as:

  • Paying bills on time
  • Reducing your overall debt
  • Not applying for new credit

These actions can make you look like a better risk for a loan. That improves your odds of approval and can get you a lower interest rate.

Use a Company Specializing in Bad Credit Housing

Most real estate companies look for properties that maximize their profit margin. Some businesses, however, specialize in bad credit or no credit housing.

These companies will often sell homes like these houses for sale for no more than a down payment. As an added bonus, the houses are often less expensive than you might otherwise find.

Buying a House With Bad Credit Is Possible

Buying a house with bad credit is possible if you approach it the right way. That starts with understanding what you can actually afford by getting pre-approved for a mortgage. Don’t ignore the monthly payment amount.

Accept that you’ll probably pay a higher interest rate. Take steps to improve your credit score. You can also look for companies that specialize in bad credit housing.

Looking for more home buying tips? Check out our homemaking and lifestyle articles.