A 604 credit score does not disqualify you from a mortgage. It narrows your menu and raises your price, but it leaves the door open. Plenty of Americans below the 620 mark buy homes every year, usually through government-backed programs rather than the conventional loans advertised on every bank homepage.
Most people start in the wrong place, collect a form rejection, and assume the answer is no. It isn’t. You just need to know which lenders’ rulebooks actually allow your score. Here’s the honest map.
What a Score Under 620 Tells a Lender
Mortgage pricing runs on a grid. Lenders sort borrowers into score bands, and everything above 620 gets priced one way while everything below gets priced another. The 620 line matters more than most because it’s the hard floor for Fannie Mae and Freddie Mac, the two entities that buy the majority of US home loans. A conventional loan can’t be sold to them under 620, which is why nearly every bank and credit union cuts you off right at that number.
That doesn’t mean the market abandons you. It means you shift to the government-backed side of the aisle or to lenders who keep loans on their own books. Expect to pay more. Expect to need a bit more paperwork. Expect it to work anyway.
FHA Loans: The Most Realistic Path for Most Buyers
FHA exists for people with damaged credit. The official minimum is 580 for the 3.5% down version, and 500 to 579 if you put 10% down. Those are the rules as written.
Real life is tighter. Most FHA lenders layer on their own minimum, usually 600 or 620, and they’re allowed to do that. The way around it is to work with lenders who skip the extra requirements. If you want the specific breakdown of what actually gets you approved for an FHA loan with bad credit, including the overlays that trip people up, read that before you start collecting quotes.
A few FHA details that matter at your score:
- Upfront mortgage insurance of 1.75% of the loan amount, plus annual MIP of 0.55%
- MIP stays for the life of the loan if your down payment is under 10%
- Gift funds from family can cover the entire down payment and closing costs
- Debt-to-income can stretch toward 50% with compensating factors like cash reserves or long job tenure
- Old collections and charge-offs generally don’t have to be paid off to close
The trade-off is that insurance premium. On a $250,000 loan it runs roughly $115 a month, and it doesn’t fall off until you refinance into something else.
Conventional Loans Below 620: What Actually Changes
There’s no clever workaround here. Below 620, conventional is off the table for a standard fixed-rate loan, full stop. Between 620 and 639 you’re technically eligible, but lenders charge extra loan-level price adjustments, so a fair number of them simply set their own minimum at 640 or 660 to avoid the hassle.
The 3% down programs still have a 620 gate
Fannie Mae’s HomeReady and Freddie Mac’s Home Possible let you buy with 3% down, and they allow income from boarders and accessory units to count. Great programs. Both still apply the 620 floor, which means a 600 score doesn’t get in the door no matter how small the down payment is. If you’re hunting for the smallest possible cash outlay, the best low down payment mortgage programs are worth comparing side by side, because the eligibility rules differ more than the percentages suggest.
VA and USDA Loans Don’t Set a Score Minimum
Neither program publishes a credit score requirement. Lenders do, because they’re the ones taking the risk, but the guidelines themselves are silent.
VA loans
If you have eligible service history, this is the strongest option available to you. Zero down, no monthly mortgage insurance, and lenders frequently approve down to 580. There’s a funding fee of 2.15% for first-time use with nothing down, though it can be financed into the loan, and veterans with a service-connected disability are exempt. The tradeoff is that VA underwriters look hard at residual income, the money left over after your debts each month, so a low score with thin reserves can still be a struggle.
USDA loans
USDA guaranteed loans cover roughly 97% of US land area, and plenty of it isn’t what you’d picture as rural. Zero down, a 1% upfront guarantee fee, and 0.35% annual. No published score minimum, but most participating lenders ask for 620, with a few going lower. There are income caps tied to your county.
If neither of those fits, there’s a wider set of home buying programs for low credit scores, including state housing finance agency loans and down payment assistance that stacks on top of an FHA first mortgage.
Portfolio and Non-QM Lenders Will Consider Almost Anything
When the standard channels close, there’s a category of lender that keeps loans on its own balance sheet and writes its own rules. Scores down to 500, bank statement income for the self-employed, recent credit events forgiven after a year or two. The cost is steep: down payments of 10% to 20% and interest rates one and a half to three percentage points above conventional. These loans make sense for a specific set of circumstances, usually a strong income with a wrecked credit file, and rarely otherwise. You can see how they compare against everything else in this ranking of home buying options for bad credit by what they cost you.
What Sub-620 Credit Costs in Real Dollars
Rate quotes vary by lender and day, but the spread between credit bands is consistent. On a 30-year fixed loan, the difference between a 760 score and a 600 score is often 1.25 to 1.75 percentage points.
Run the numbers on a $300,000 mortgage. At 6.5% you’d pay about $1,896 a month. At 8% you’d pay about $2,201. That’s roughly $305 a month, or close to $110,000 across the life of the loan. It’s a real number, and it’s why the fastest path to saving money usually isn’t finding a clever lender. It’s raising the score.
For a fuller picture of the costs beyond the rate itself, including insurance and closing figures, this breakdown of what it costs to buy a house with bad credit is useful.
What Moves a Score Fastest Before You Apply
Credit scores are not a mystery, and some levers move within weeks.
- Pay revolving balances down. Getting a maxed card under 30% of its limit, then under 10%, is the single biggest jump most people see. Forty points is common.
- Ask for a rapid rescore. Your loan officer can submit proof of a paid-down balance and have the report updated in a few days instead of waiting for the monthly cycle.
- Dispute genuine errors. Wrong balances and accounts that aren’t yours show up more often than you’d think.
- Leave old accounts open. Closing a card you’ve had for a decade shortens your history and dents your score.
- Stop new applications. Every credit inquiry chips away at your file for a year.
- Become an authorized user. A family member’s well-managed card can lift a thin file, as long as the card’s balance is low.
What usually doesn’t help
Paying off a collection from 2019 does less than people expect, since scoring models weigh recent behavior far more heavily. Closing accounts to look responsible backfires. And applying to six lenders to “see who says yes” leaves six inquiries on your report for a year, which is why it pays to have one broker pull your file and shop it properly.
Your Next Two Weeks
Pull all three credit reports at no cost and read them closely. Fix anything that’s wrong. Pay down whichever card is closest to its limit. Then talk to a broker who works with government-backed loans rather than walking into your local branch, because banks price their own products and rarely bother with anything outside their comfort zone.
Ask two questions at the start of every conversation: what’s your minimum score for an FHA loan, and do you have any overlays above the FHA guidelines? The answers tell you in thirty seconds whether you’re wasting your time. From there, get a full pre-approval, not a pre-qualification, so the seller knows your offer is funded. A 590 score with a real approval in hand beats a 720 score with a maybe.