A 592 credit score does not disqualify you from buying a house. It changes which programs you can use and what those programs cost. That distinction matters, because a lot of the bad news people repeat about low-score mortgages is either outdated or flat wrong.
Here is what actually exists, who backs it, and the numbers attached to each one.
What Lenders Mean When They Say “Low Credit”
There is no single cutoff. Every loan type sets its own floor, and individual lenders stack their own rules on top. A score that earns a yes from one lender is a no from another, sometimes on the same afternoon.
- FHA: 580 minimum for the 3.5% down program. Between 500 and 579, you need 10% down.
- VA: The VA sets no minimum of its own, but most lenders add a 620 overlay. A few will go lower with compensating factors.
- USDA: 640 for automated approval. Below that the file goes to manual underwriting, with 581 as the usual practical floor.
- Conventional: 620 is the hard minimum for Fannie Mae and Freddie Mac loans, including their 3% down first-time buyer products.
So a 595 score opens FHA and may open VA through the right lender, while conventional is out. A 545 score leaves FHA with 10% down and USDA manual underwriting. Both are real paths, and both are worth understanding before you talk to anyone. Can you buy a house with bad credit? The honest answer is yes, and the cost lands somewhere between a slightly higher rate and a much higher one.
FHA Loans: The Workhorse for Lower Scores
FHA insures a huge share of first-time buyer loans, and for good reason. The credit bar is low, the down payment is small, and the guidelines are forgiving about past credit trouble. A bankruptcy discharged two years ago or a short sale three years back does not automatically kill your file.
The costs are real, though. Expect an upfront mortgage insurance premium of 1.75% of the loan amount, which you can roll into the loan, plus an annual premium of roughly 0.80% to 0.85% depending on your loan-to-value. Put less than 10% down and that annual premium stays for the life of the loan. On a $250,000 mortgage, that is about $2,000 a year that never goes away.
FHA also lets sellers contribute up to 6% of the purchase price toward your closing costs, which is more generous than most conventional programs. In a slow market, that is real negotiating room.
VA Loans: No Minimum on Paper, Overlays in Practice
VA loans are the best deal in mortgage lending when you qualify, and the credit rules are the loosest of any major program. Zero down, no monthly mortgage insurance, competitive rates. Lenders still underwrite, though, and 620 is the line most of them draw. A 580 borrower with 12 months of clean rent history, three months of reserves, and a solid debt-to-income ratio can still get through.
There is a funding fee: 2.15% of the loan for first use with nothing down, 3.3% for later uses, and lower amounts if you put money down. Veterans with a service-connected disability are exempt.
USDA Loans: The Most Overlooked Option on This List
If the property sits in an eligible rural area and your household income is under the local limit, USDA backing gets you 100% financing with no monthly mortgage insurance. Instead you pay a 1% upfront guarantee fee and 0.35% annually, a fraction of what FHA charges.
The catch is credit. Automated approval needs a 640. Between 581 and 639, the loan has to be manually underwritten, and not every lender bothers. USDA’s direct program, run through local offices, goes further still and can subsidize payments for lower-income households, but the waiting lists are long.
Conventional Programs With More Room Than You Think
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible both start at 620 with 3% down. They carry income limits, generally 80% of your area median income, and they price better than FHA once your score clears the low 700s. Below that, FHA usually wins.
State Housing Finance Agency Programs
Nearly every state runs a housing finance agency with its own first-time buyer program. These often come with below-market rates, a grant or a forgivable second lien for down payment, and credit floors that sit between 620 and 640. Some pair with FHA, so a 620 score can get you a reduced rate plus help with closing costs.
They are not advertised well, and plenty of buyers never hear about them. The best low down payment mortgage programs usually stack two of these layers together, so it pays to ask a loan officer what your state offers alongside the federal program.
What a Low Score Actually Costs You
Credit score pricing adjustments, called LLPAs, are baked into every rate quote. Moving from a 760 score to a 620 score can add 0.5 to 0.75 percentage points to your rate, sometimes more depending on down payment and property type. On a $250,000 loan, that is roughly $125 extra every month, or more than $45,000 across 30 years.
Layer FHA’s mortgage insurance on top and the gap widens. That does not mean waiting is always smart, since prices and rents keep moving while you wait. The best home buying options for bad credit, ranked by what they cost you lays out the trade-offs side by side if you want to run the math on your own numbers.
Compensating Factors That Get Files Approved
When your score sits below a lender’s comfort zone, the file goes to a human. Manual underwriting is not a rejection, it is a second look, and underwriters weigh factors beyond the number.
- Cash reserves covering three to six months of payments
- A debt-to-income ratio under 36%, or under 43% with strong reserves
- Two or more years with the same employer in the same field
- Twelve months of on-time rent payments, documented by cancelled checks or bank records
- No late payments, collections, or new credit lines in the past 12 months
- A larger down payment, even 5% instead of 3.5%
A 600 borrower with six months of reserves and a 32% debt-to-income ratio is a stronger file than a 680 borrower carrying four maxed-out cards. Underwriters know the difference.
Quick Fixes Worth Trying Before You Apply
You do not need years to move a score. Paying a revolving balance from 80% utilization down to under 10% can add 20 to 40 points in a single billing cycle, and a rapid rescore through your loan officer can push that update through in three to five business days. Disputing a genuine reporting error works the same way.
Do not open new credit, finance a car, or close old accounts in the months before you apply. Account age and available credit both count. Home buying hacks that can save you money covers the smaller moves that add up, from timing your application to shopping several lenders inside a 14-day window so the inquiries only count once.
Ignore the Myths, Read the Guidelines
You do not need 20% down. You do not need a 740 to get a reasonable rate. You do not need perfect credit. Home buying myths keep people renting for years, and that rent costs far more than the rate difference on a low-score loan. Most of those beliefs collapse the moment you read an actual guideline.
Where to Start This Week
Pull your FICO scores from all three bureaus, not a free consumer score, since mortgage lenders use the middle of the three. Then call two or three loan officers who write FHA, VA, and USDA loans regularly, and ask each one the same three questions: what score do you need for your best program, can you do a rapid rescore, and what does my state housing agency offer alongside it.
Pre-approval usually takes a day or two once your documents are in. The number that comes back may surprise you, and it will almost certainly be higher than the no you assumed.