Can I buy a house with bad credit?

Can I buy a house with bad credit?

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Yes, You can buy a house with bad credit. In this article I’m gonna show you how you can achieve your dream of becoming a homeowner even if you have less than perfect credit.

And even if you have down in the dumps credit.

The best thing to do to increase your chances of qualifying for a home loan is to start preparing early. The earlier the better so, if you dream about buying a house I would recommend starting preparation around 12 to 18 months out.

This will give you plenty of time to monitor and work on your credit as well as get prequalified for a home mortgage loan.

How to buy a house with bad credit

Can I buy a house with bad credit?

Now, short of improving your credit in advance of buying your home, there are still ways of buying a house if you have less than stellar credit.

The first option is to buy a house cash.

How to buy a house cash with poor credit

You don’t need credit in life. It can make things easier if you don’t have enough cash but cash is always king so if you have enough money in the bank you can always purchase a home as a cash buyer.

Doing this is probably out of reach for a lot of people. It means saving a lot and saving consistently over a period of time or having a very high income that would allow you to save lots of money quickly. How ever out of reach this may feel, it is still an option to help you buy a house with bad credit.

How to buy a house with owner financing

The next option to buy a house with bad credit is to get owner financing.

Owner financing is where the home owner of the property that you want to buy is willing to self-finance the sale of their home to you directly.

This works kind of similar to a traditional bank mortgage loan except instead of paying the bank you will be paying the owner of the home. This is more high risk especially for the homeowner so if you go this route, expect for your interest rates to be higher than if you were to security a traditional mortgage.

And this is the cost of having bad credit. Bad credit doesn’t necessarily mean that you can’t make big purchases like buying a car or buying a house but, it will be more expensive and this is an example of that.

How to buy a house with a hard money loan

Another way to buy a house with bad credit is to secure a hard money loan. Hard money lenders can be found online through some quick and fast research.

Just head to Google and search for “hard money lenders near me” or something similar. With hard money loans it’s really based on the collateral.

These lenders are less concerned about your ability to repay the loan since the house is the collateral and if you default they can collect the property as their payment. This is another higher risk kind of loan so if this is an option you pursue, make sure to look at all the fine print as these loans may be more strict with their default rules and come with a higher interest-rate and higher payment.

How to improve bad credit so you can buy a house

How to buy a house with bad credit

This is an option that I hope you decide to pursue because it means you can increase your chances of landing a traditional mortgage loan with a lower interest-rate and a lower payment.

Plus with stronger credit you’ll be able to secure credit cards and get other types of financing more easily like car loans or personal loans. It just makes things easier when you have good credit though again, it’s not required in life.

While the three options shared above are opportunities to buy a house with bad credit, it may make more sense for you to take time and effort to fix your credit. This is the cheaper route to go so if money is a concern, listen up.

If you plan and prepare, waiting 12 to 18 months before you make your house purchase, you can totally turn around your credit.

Here is a step-by-step guide of what to do to improve your bad credit.

Step 1. Check your credit report

First, look at your credit report.

You are allowed one free credit report per year so head to Credit Karma and check your report. Keep in mind the report is free and if you’re curious about your credit score, this may cost money but it’s usually pretty affordable and under $20 or so.

When you are reviewing your credit report, the main thing you want to look at is if there are any inaccuracies. Inaccuracies are things that are wrong on your credit like credit errors.

Some examples of credit errors may include accounts on your credit report that are not yours, payments that are reporting late in error, names or information on your credit report that is wrong, etc.

Once you identify these errors you can start taking steps to correct them which is going to be step two.

Step 2. Review your credit

Next it’s time to correct the inaccuracies on your credit report.

You can do this yourself but I would recommend working with a professional. The reason why you should work with a professional is because it will be less stressful and overwhelming for you, you can put this project in the hands of a professional who can work quickly and efficiently to resolve any issues you have on your credit.

If you choose to take this project on yourself, in this step you’re going to contact the credit bureaus to address the inaccuracies and dispute those items so they can be corrected and/or removed.

Pro Tip: Work with credit repair specialists

If you do decide to take my advice and work with a professional to fix your credit, I highly recommend Lexington Law. I have many friends and family members that I’ve gone through Lexington Law to help them fix their credit. They are professionals, they work quickly and efficiently and you’ll start getting results almost immediately.

Keep your eye on the prize and remember the goal is for you to fix your bad credit so you can buy a house. This step is crucial and you definitely want to address it and avoid a delay as it can cost you the house that you dream of.

What they’re customers are saying

I know several people that have gone through them to turn around their credit. Here’s what some of their customers are saying…

lexington law
credit: Lexington Law

After working with Lexington Law there’s really little that you need to do beyond this. They’re gonna work on your behalf to contact your creditors, resolve any discrepancies and help you boost your credit.

While you’re doing this I recommend saving money because if there are accounts that you owe on that are accurate you’ll want to resolve them if they’re in bad standing and you can even negotiate with the creditors to have them delete those poor reporting accounts and exchange for paying off the debt.

And you likely will not even need to pay 100% of the debt you can negotiate a lesser amount amount.

Click here to learn more about Lexington Law.

Step 3. Boost your credit

Put your credit in the hands of Lexington Law and keep paying your bills on time and look at opening one or two small credit accounts and keeping them in good standing.

This shows the banks that you’re trying to get qualified with that other creditors were willing to take the risk of taking you on as a customer and you kept your accounts in good standing and made your payments on time.

If you’re having a tough time trying to find credit to get approved you can look at opening a secured credit card. You could also check out Self Lender which is a great way for you to build credit while saving money.

You pay a small $15 fee to Self Lender to set up your credit account and then you make payments every month. While making those payments, they go to a sort of savings account and at the end of the term you’ll have that money available to you.

So if you pay $50 a month for 12 months which is your term, at the end of 12 months you will have $600. Plus you’ll have 12 months of good positive payment history on your credit report. Something else you can do to boost your credit is to get set up as an authorized user on a credit account with someone who has good credit like a parent or family member.

So, you can be added as an authorized user on a credit card and while those payments are being reported positively that will help you to increase your credit.

Do this for the 12 to 18 month window. The goal is to make your payments on time, keep a positive payment history, while addressing any negative or delinquent report reporting accounts on your credit report so those can be resolved and deleted and be replaced by your current positive payment history in good standing on your credit accounts.

Getting your finances ready to buy a house

how to buy a house with bad credit

When you’re buying a house you have to know that you’re gonna need money.

That can be money that you use to pay off debts that you have now as well as money needed for closing. When you close on a house there are closing costs and while you can negotiate for the seller to pay those cost for you, it’s a good idea to be prepared and have that money set aside in the bank just in case you have to pay them.

You should start as early as possible with raising some extra money. Check out these seven get paid weekly apps which are a great source of additional income. These entry level remote jobs are good for making money too.

You can use the money you make from these apps to pay off your debts and save extra money in the bank.

Final Thoughts : How to Buy a House with Bad Credit

So this is the magic recipe to help you buy a house with bad credit.

It can definitely be done. There are a lot of steps in the process but it’s totally worth it to escape rent and become a homeowner.

I have been a homeowner and I’ve also rented a house so, I can tell you that homeownership is so much sweeter. Not having to worry about putting holes in the walls by hanging pictures or getting permission to change out a door knob or paint your living room.

The freedom and flexibility to install hardwood floors for upgrade your kitchen, add a pool in the backyard or do whatever the heck you want in your own house. The feeling is priceless and it’s something that you can get with being a homeowner.

I hope this article is helpful. Please comment below if you have any questions. Thanks for reading.


Jenn Leach, MBA

Jenn Leach is a Houston-based MBA with over a decade of experience in the banking industry. She writes at Millennial Nextdoor where she writes finance, money, business, and lifestyle content to help millennials create additional income streams online. Join her on Substack at

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