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Buying a Home With Less Than Perfect Credit

Homeownership dreams are often delayed when a buyer has bad credit or a low credit score. However, several steps in the right direction could rapidly improve a consumer’s credit rating. Known for assisting home buyers with a variety of credit challenges, Perennial Funding employs loan specialists who look for ways to help an applicant secure a mortgage approval.

What Credit Rating or Credit Score is Needed to Get a Mortgage Loan?

Mortgage lenders generally review an applicant’s credit history for the preceding 24-month period. With a solid payment record to creditors for at least two years, an applicant may qualify for home loan funding, provided that certain income requirements are met.

Applicants should know that recent payment experiences are reviewed very closely. Late payments on a credit card, auto loan or other items that are reflected on a consumer’s credit profile within the previous six months could signal to a mortgage lender that an applicant has experienced recent financial troubles.

However, if several late payments were made 18 to 20 months ago, a borrower might be able to provide an explanation for a specific situation that has been resolved.

According to the myFico website, recent late payments are more detrimental to credit scores than aged delinquencies.

Strong credit ratings and excellent credit scores are needed to get the best mortgage rates. While a FICO score of 700 is a good rating, credit scores can range between 300 and 850. Typically, mortgage lenders want to see that an applicant has a credit score of 620 or greater.

With a credit score of 580, an applicant might qualify for a home loan from the Federal Housing Administration. Among the most popular programs for first time home buyers, FHA mortgage loans are offered with a down payment of 3.5 percent of the sales price for a home.

Other options may exist for applicants with a 550 credit score or lower. Speaking with one of our licensed loan officers about ways to enhance a marginal credit score or about making a larger down payment could present several avenues toward funding to buy a home.

Are There Tips for Buying a Home With Less Than Perfect Credit?

Yes! Prospective home buyers who are cognizant of the following practices may have an easier time securing a mortgage loan approval.

  • Pay creditors on time.
  • Avoid inquiries for new types of credit.
  • Refrain from financing anything within six months of buying a home.
  • Save additional money for a down payment and closing costs.
  • Do not change jobs after applying for a mortgage loan.
  • Pay more than the minimum amount shown on credit card statements.
  • Regularly review credit ratings and scores.
  • Work with a professional loan officer.


Knowledgeable mortgage professionals can assist applicants with a variety of credit challenges. Some options might be to add a co-borrower to help strengthen a loan application, to save for a larger down payment or to pay off certain debts before reapplying for a mortgage loan. Contact Perennial Funding today at (888) 826-4856 for more details about qualifying for a home loan.

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Perennial Funding LLC, 161 Washington St. Suite 950, Conshohocken, PA 19428

Loan programs are subject to credit approval. Other terms, conditions, restrictions and fees may apply. All of the information on this website is published in good faith and for general information purposes only. Perennial Funding does not make any warranties about the completeness, reliability and accuracy of this information. Any action you take upon the information on our website is strictly at your own risk and we will not be liable for any losses and damages in connection with the use of our website. The content in this website should not be construed as a mortgage loan commitment. From our website, you can visit other websites by following hyperlinks to these sites. While we strive to provide only links to useful and ethical websites, we have no control over the content and nature of these sites and the links to other websites do not imply a recommendation for all of the content found on these sites. Please be aware that when you leave our website, other sites may have different privacy policies and terms, which are beyond our control. Thank you for visiting Perennial Funding's website.
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