How To Buy a House With Little Money Down and Bad Credit

You’re considering buying a home very soon; but, you have some concerns. Where are you going to get a large down payment, and when will the credit fairy come magically increase your scores to “qualifying level?”

That’s a common response to the idea of buying a home. The desire is there, but perhaps not the ability.

Or so you think… 

I hear mortgage brokers tell me ALL the time, many people have no idea they can buy a home so they don’t even consider it. Perhaps they don’t have a down payment or their credit isn’t perfect. But the truth is that with a little time, work, and patience, homeownership can be a reality, not a fantasy.

You just need the right people in your corner. ?

I often revisit my experience purchasing my first home back in 2015. It was scary and overwhelming for me- a single parent of 2. I had such a strong desire to purchase, but was intimidated by the process.

However… I really wanted it!!!

So, I worked hard to save for a down payment, researched what I could comfortably afford,  got my credit into good shape, and worked closely with my team of professionals. Turned out that the team I worked with was so great, I was in a home in less than 2 months, with very little out of pocket cost!


Well that’s great Jeri, but what about the down payment?

That big chunk of cash is what stands in the way for many people. But available programs on the city, state, and federal level can help.

If you qualify for a conventional loan (the least-expensive type, which conforms to tougher rules written by giant mortgage companies Fannie Mae or Freddie Mac) you’ll need a down payment of at least 5 percent.

For a Federal Housing Administration (FHA) loan, the most common loan type for first-time homebuyers, the minimum down payment is 3.5 percent. However, a number of nonprofits can help middle-income buyers with down payments. Some buyers are able to get a home with no down payment at all.

Not to mention (under certain guidelines) monies can be “gifted” to you to use for a down payment.

The U.S. Department of Housing and Urban Development’s (HUD) website has a state-by-state list of programs.

A knowledgeable lender will be able to tell you how much you need to come up with for your down payment and recommend any available grants or assistance programs to help offset the costs.


So now that you’ve figured out how to get your down payment taken care of, it’s time to think about closing costs. Closing costs can be one of those unexpected expenses that sneak up and bite you if you are not prepared. They range between two and seven percent of your loan amount.

But, wait… before you freak out and decide you’re definitely not homebuyer material, there are ways to get help here too.

Assistance programs that offer down payment funds often allow funds to be used to pay closing costs.

Depending on the strength of the real estate market in the area in which you are buying, the seller may kick in closing cost assistance, or cover it all together for you.

A good lender may be able to offset closing costs through a credit as well!

Just be aware… If you are working with a lender who is isn’t knowledgeable about different assistance programs that can help you purchase a home, or is unwilling to help you find out, perhaps it’s time to move on to a new lender.



Now comes the hard part for many people, because credit worthiness is often the one area where getting from point A to B might be out of their hands.

I recommend addressing any credit problems a entire year before applying for a mortgage. Ordering your credit report, and working on any credit scores that won’t meet qualification minimums is extremely important.

For an FHA loan, don’t expect to qualify with anything lower than a “middle” score of 580 on the three credit reports (Experian, Equifax, and TransUnion). The higher the “middle” score, the more likely it is you will qualify without extra effort and the better your interest rate will be.

If your scores are low, it’s time to take action. And, unfortunately, repairing your credit isn’t as straightforward as it should be, whether the issue is errors on your report or blemishes you need to make right.

The world of credit repair is complicated and frustrating and often makes no sense whatsoever. It’s not for the faint of heart, and it’s probably not for buyers to take on by themselves unless they have endless time, patience, and knowledge of how the system works.

Don’t get me wrong…

Success stories are out there – I am one of them.

I was one of those desperate homebuyer who raised my score from a 545 to 765  points in 8 months, and am now a happy homeowner!

I thought I’d be renting forever, but with a strategic plan and a great team, I now have a place I can call my own.

With all that being said…If you think you’re ready to take the step to homeownership, I suggest taking a trip over to view our checklist of things you’ll absolutely need before closing on a home.

If not, you can…


If you’re the type of person who would rather have a professional handle it and get your file prepared for a mortgage, with little to no money down, I suggest you contact us today. We’ll take care of you. Give us a call at 1-888-708-9171 or Schedule a consultation.


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1 Comment

  • Henry Reply

    I would like your professional to handl it to get my file prepared for a mortgage.

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