Home Buying in 94523>Question Details

Rose Riche, Renter in Concord, CA

can we buy a home with credit scores of 560? we are tired of throwing money away on rent

Asked by Rose Riche, Concord, CA Sun Nov 20, 2011

dream of home ownership

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Gregorio Denny’s answer
I love the way 2 agents are telling a borrower what they can or cannot do without looking at their entire financial profile. The truth is, I that have successfully arranged financing for people with credit scores below 560 and have at times, been unable to get financing for people with credit scores of 810. I strongly caution you to avoid anyone who would make a blanket statement of fact as to whether you qualify or don't qualify without a review of your situation by one licensed and familiar with guidelines.

That being said; I have found that medical debt and collections wreak havoc on credit scores. Almost all of the clients I work with that have credit scores under 600 have unpaid medical debt and this can be overcome. The most important factor is the reason for the credit score and not the score itself. FHA allows down to 500 with 10% down so it's possible. You need a thorough review of your credit report by someone who knows what will be a deal killer and what will be allowed. Not all derogatory credit information is treated the same and the agents here telling you that you cannot purchase without a shred of information from you other than a score, are irresponsible and operating outside their scope.

A good loan officer will first work with you to get your score as high as possible. If after that you still fall in the 500 range, there may be options. Don't let people stop you from at least trying. Information is free.
4 votes Thank Flag Link Sat Feb 11, 2012
Great answer! Generalizations are always dangerous.
Flag Wed Dec 26, 2012
I've seen some of my clients with a 560 score here in California get approved with a 560 score for FHA and VA, it all depends on the lender. Go to The Lenders Network they can help you find a lender to do your loan.

Good luck!
9 votes Thank Flag Link Mon Sep 9, 2013
Lenders Network requires 580 credit score
Flag Sun Jun 28, 2015
There is fact and there is ignorance!!! Ignorance says you can’t get a loan under 620, But the fact is this. If you have a score between 500-579 you need to put down 10% so you have skin in the game because you are higher risk according to FHA. Your rate will be 1/2% (.5%) above market rates but your closing cost the same as 800 FICO. Yes, you are going to pay for that FICO score between 500-579. Many large brokers do these deals if they make sense and you are worthy of the loan as many people are. I am a broker with over 95 lenders on my books so I know this. Some brokers only have the ability to deal with one or a few wholesale lenders so they only know what they are told. Also 580-620 loans are opened to about 15 more wholesale lenders that any medium size broker has access too. FACT: Conventional loans require 620 FICO and you need at least 5% down. On a conventional loan you can put 3% down if you have 660 FICO. The main thing the lender wants to look at is why you got into trouble and if the deal makes sense. Many people got into trouble that was unavoidable and are low risk. I can give many, many examples of why people with low FICO should be able to buy a home and why others should never be able to own a home until they get there score to 720. I am saddened by the ignorance I read by professionals answering questions like a politician. If you don’t know the answer then tell people it is your opinion. If you are judgmental then stop responding to these sites that are to help people.
4 votes Thank Flag Link Thu Mar 15, 2012
No. You can't buy a home with credit scores of around 560. (Oh, I'm sure someone--probably a mortgage broker here--will say they can help. But, no, you really need scores above 600 to buy conventionally.)

Look, if you want to throw your money away, just put it in an envelope and send it to me. You won't get anything in return. But this whole "renting is just throwing your money away" is a line used by some real estate agents to inject a false sense of urgency into buying.

You're not throwing your money away by renting. You're getting something very valuable in return: A place to live.

OK. The argument is that all you have at the end of the year are rent receipts. You have no equity. That's true. So you want to buy. Let's say you find a place for $200,000. You qualify for an FHA mortgage at 3.5% down. You get the seller to pay all closing costs. Sweet, right? So you're now out of pocket for your $7,000 down payment. Considering that the costs to sell are roughly 10% of the value of the property, if you tried to sell right away, you're at least 6% underwater. You'd have to bring at least $12,000 to closing.

But let's fast-forward a year. What's happened to real estate prices? If they're down, you're even in a deeper hole. A drop of 5% means you've lost $10,000. If prices stay flat, you're still $12,000 upside down. If they've gone up 5%, you're STILL upside down.

Meanwhile, compare the costs of ownership versus renting. In some parts of the country, it's cheaper to own than to rent. But in most areas, it's cheaper to rent than to own. Work the numbers where you are.

Then there's the issue of mobility. If you rent, you can move without penalty when your lease is up. So every year, you can decide whether or not to move or to stay. It's not so easy if you own.

If you have the "dream of home ownership," then it's OK to pursue it. But don't confuse dreams with reality. The reality is that you're not throwing money away on rent.

Hope that helps.
3 votes Thank Flag Link Sun Nov 20, 2011
Really bad information because its just not true. Were do you get this from???
Flag Thu Mar 15, 2012
Don Tepper, Real Estate Pro in Burke, VA
Hello Rose, yes sure if you have 10% down payment? Your fico scores can be raised within 3-4 days in most cases to qualify for programs, rates and terms as necessary.

You may qualify to buy FHA with fico scores between 500-579 with 10% down or minimum 580 fico score may qualify FHA 3.5% down or as low as .5% half percent down payment program. You may consider 3% down conventional from a minimum 620 fico score.

You will need to be pre-approved if you decide to buy to be able to meet an agent to view and submit offers on any homes of your choice. Your qualifications will be determined by your credit profile, debt to income ratios, fico scores, home price, loan program and how much you want to invest into the down payment and closing costs.

You may qualify to buy with minimum out of pocket expenses and pay less than rent in many cities. It only takes a few dozen questions to qualify, go over your options and email you listings to study and compare. Here are some links to study as well as web reference links to many loan program pages offered...

Sheryl Arndt, Real Estate Broker - Sr. Loan Officer CA only
Veteran & VA/CalVet Loan Specialist
REO & Short Sale Specialist
Credit Repair At No Cost
ALL Loan Programs Available
22+ Years Experience
BRE# 01140252
NMLS# 297251
9am till 5pm by phone Monday thru Saturday, Sundays by appt., EMAIL ANYTIME 24/7
Under640FicoScoreLoans@gmail.com or HomeLoans4U@live.com

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2 votes Thank Flag Link Tue Apr 28, 2015
We recommend speaking with a reputable lender in your area. With a large downpayment and verifiable reasons for the low credit score, you may be able to find a lender who will work with you. Good Luck!
1 vote Thank Flag Link Thu Mar 15, 2012
Yes you can get loan with a 560 credit score. However the terms won't be favorable. 10% down, reserves, higher rates...

As the score being an accurate picture of how you pay your bills is an outdated model. The credit scoring model is designed to favor banks period.

Let's give an all too common example. Suppose when the economy crashed a few years ago you were laid off and were out of work for 4-5 months. You started having late payments, not behind just late payments. Then back to work and your are all caught for the last two years. You are still dragging the late payments and they can hold your score down.

According to the scoring model those late payments are there for 7 years or til you get them removed.

Everything can be removed
Web Reference: http://usmoneymatters.com
1 vote Thank Flag Link Tue Nov 22, 2011
It is not impossible, there are some lenders that will take 560 on a FHA loan if you have very strong compensating factors (down payment size, money in the bank). Also, you can't have been late on anything in the last 12 mos. I would suggest having an experienced loan officer do a credit check and go over your credit in detail with you. Often there are some small things that can be done to quickly raise your score...like getting credit card balances below 30% of your credit limit.
1 vote Thank Flag Link Sun Nov 20, 2011
I work for a direct lender in the mortgage industry who offers conventional, FHA VA, and USDA loans in 47 states. For VA home loans it's NO down payment. Are lowest score we accept for government loans are 550 when most lenders require a 620 and brokers a 580. You have to have two years of income with a score over 550 with bankruptcies discharge date 2 years and over. We have basic guidelines and a pretty easy process. Feel free to text me or call me anytime up to 10:00pm Eastern with any questions.
Brian Young 214-797-3479. NMLS#902687
0 votes Thank Flag Link Sat Feb 20, 2016
580 is the minimum score for FHA Loans. Check out The Lenders Network, they referred us to our lender and we were approved after being rejected by like 5 lenders!
0 votes Thank Flag Link Wed Jun 17, 2015
Never say no to yourself and never stop looking or trying for the lender for you. As the man said below, each loan and situation is different and each loan requirement is different so please don't give up and don't listen to your friends or family members tall you about their loan requirements, look for the lender who will consider your particular situation and information and make a decision based on that and their own specific requirements.

Hope this helped.
0 votes Thank Flag Link Tue Apr 28, 2015
There could be several options available to you with a 560 credit score. Although the best pricing is reserved for those with great credit history.


With a 560 you can get a loan up to 96.5% of the homes value. If you cannot come up with the 3.5% down payment there are a few down payment assistance programs that are available in the Contra Costa County Bay Area deeding on your income.

There are also several Portfolio or Private money options that might fit you depending on exactly what is going on with your credit.

You may be best served working on repairing your credit though... do you know what is effecting your scores?

It may be possible to remedy your credit issue and do a "Rapid Re-score" to increase your credtt and get you the best loans available.

Rapid re scores are not very expensive and if it would be helpful we can show you specific things that you can do in order to get the scores that you need.

I hope this helps.
0 votes Thank Flag Link Sat Sep 20, 2014
Getting a loan approved for a borrower that has a 560 credit score entails much more than the FICO. Yes I have done it before, but for you my question would be why is your score so low. Do you have recent foreclosure or bankruptcy, or short sales? So, just knowing the score is a start. Knowing what is on your credit report, and if you have the ability to repay are a couple examples of the risk assessment you will go through. So just saying your have a 560 score is a little ambiguous.
0 votes Thank Flag Link Sat Aug 23, 2014
Anyone in Atlanta Georgia that can help me with a home loan with low credit score of 564.. hopefully its higher.
0 votes Thank Flag Link Fri Aug 15, 2014
@Rmriche, Sorry it doesn't it hurt. bad spelling
0 votes Thank Flag Link Sun Nov 10, 2013
@Rmriche, I'm with Coldwell Banker in Walnut Creek, We have in our office Princeton Capitol, best thing to do is to try, it doesn't heard. There is lots of loans out there for people in different situations right now. or give me a call at 925-200-0233 and I will get you started.
0 votes Thank Flag Link Sun Nov 10, 2013
I just found a site that tells you if you can qualify for a mortgage after a short sale or foreclosure. Try http http://:www.whywaitbuytoday.com
0 votes Thank Flag Link Sun Aug 11, 2013
Wow...there are some complex answers to an easy question...Don looks to have gotten it right, in a big way.

1. Nope...can't buy. I'm a Broker in the Memphis area...bad credit and bankruptcy capital od the U.S. Our minimum score for an FHA loan is 620 with 3.5 percent down. You need to get a lender to work with you on credit counciling and do what he/she says to bring your score up to their minimum FHA score.

2. Yep...you can rent...probably not from a corporate situation like an apartment community or management company...but some private owners might be likely to let you rent fom them. Be honest on your application and about your credit. If you have good references from renting before..that is helpful. If you have ever been evicted or have judgements, then you have an uphill battle. But, If you present yourself professionally and respectfully, you have a better shot.

Renting is not a bad plan in this environment. Rates aren't going up anytime soon and there is plenty of inventory...so take your time. The worst mistake you can make is get in a hurry or for goodness sakes, put yourself in some dead-end lease purchase situation.

Get a good realtor that want to make you a buyer in 9 months to a year. Helps you find that great mortgage broker and hopefully, checks-in on your progress. This is YOUR future...so take is seriously.

Good Luck
0 votes Thank Flag Link Sat Feb 11, 2012
Bad information!!!
Flag Thu Mar 15, 2012
You'll need to raise that score if you want more options. I'd consider looking at your credit report and see if you can delete some of the reportings.

If you need help, reference my website on credit restoration. My guy is the one I go to to help people that need to raise their score if they wish to purchase.
0 votes Thank Flag Link Tue Jan 3, 2012
Correct, if you get over 640 FICO the world is yours. I use Erika for my credit help company.
Flag Thu Mar 15, 2012

I am sure you can still get approved for a loan. You may pay a higher rate in the beginning. You need to find a lender that can assist you. I have some excellent lenders hat I can recommend if you are still considering buying. I specialize in negotiating with Short Sales and REO and normal properties and can help you with the purchase side or selling of a home if you needed. Between the lenders that I recommend and myself, we could help you buy your home. You need a Realtor and Lender that is going to go above and beyond to get you in that first time home and you will happy for it in the end.

When you are ready to get to that next level, call me and I can help you with all your home purchase needs.

Best regards,

Lillie Missbrenner
Better Homes and Garden Previosly Prudential California Realty
Danville, Ca
0 votes Thank Flag Link Sun Nov 27, 2011
While it is very possible credit score of 560 mean something like not having a budget...

BUT To assume that is the case is well....

The recent economic conditions have destroyed the validity of the current scoring model.

Buying more than can afford is not very smart. But neither was lending the money without income verification.

I have learned a lot about credit over the last couple of years. One thing I can tell you it is a rigged game. I realize if you don't pay it has an effect.

But why aren't monthly utilities, rent, cell phones, gym memberships being credited as a positive trade lines? Oh that's right if you don't pay they are reported. Because it is in the best interest of banks and insurance companies to keep your score lower.

I think if you are not going to count the positive you cannot count the negative of the same item, seems fair to me.

Remember Everything cost more when your score is lower. Hmmm!

Credit reporting is a business controlled by banks. BUT the laws favor the consumer.

So if you want to leverage your rights under the law and force the agencies to follow the law with your credit profile get a hold of me. 801-999-8209
Web Reference: http://WantMoreLeads.com
0 votes Thank Flag Link Tue Nov 22, 2011
There is more than one way to get a credit score that low, but most of them will kick you out meeting the minimum scorecard required to get a mortgage. Credit scores get the most attention because they are the easiest to pick on. My guess is there is something causing the problem, usually caused by not having a budget, Freddie Mac publishes a very good one. Look internally before trying to find a lender. If you can find one they may not be doing right by you if they lend funds you can’t afford/manage. Hope this keeps you from getting hurt, good luck.
0 votes Thank Flag Link Tue Nov 22, 2011
A credit score of 560 indicates a problem with how you pay your bills. An underwriter looks for a willingness to pay. Go to your local nonprofit housing group for credit counseling. The counselor will go over your credit report with you and tell you what you are doing wrong. Listen to them and follow their advise. When your score is 640+ you can think of buying a home.
0 votes Thank Flag Link Mon Nov 21, 2011
Maybe they co signed or had unavoidable medical incident that cause the score to go low. 560 doesn't mean you have a bad pattern of paying bills.
Flag Thu Mar 15, 2012
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