To buy a house with poor credit, first review and correct errors on your credit report. Next, improve your credit score by paying bills on time, reducing credit utilization, and avoiding new credit inquiries. Consider a cosigner with good credit to qualify for better loan terms. Explore government-backed programs like FHA loans (which accept lower scores) or VA loans (no down payment for veterans). Save for a down payment (as low as 3% with FHA) and closing costs (typically 2-5% of the loan amount). Finally, choose a fixer-upper to lower upfront costs or partner with a real estate investor for a lease-to-own agreement.

Poor credit scores (below 600) can hinder mortgage approvals due to higher default risks. However, federal programs and private lenders offer alternatives. For example, FHA loans require a minimum credit score of 500 for a 10% down payment or 580 for a 3.5% down payment, making them accessible to borrowers with poor credit. In 2023, 24% of first-time homebuyers used FHA loans, according to the National Association of Realtors. A 2022 Federal Housing Finance Agency study found that borrowers with scores 500-629 secured loans at average interest rates 1.5-2 percentage points higher than those with scores 630-679. Cosigners can boost approval chances by 40-60%, as FICO data shows. While a 20% down payment minimizes mortgage insurance, programs like USDA and VA offer 0%-100% financing for eligible buyers. Fixer-flippers can increase home value by 5-15% within 6-12 months, per Zillow’s 2023 report, offsetting higher purchase prices. Improving credit by 100 points can raise approval odds by 50%, per Experian research. Combining these strategies enables borrowers to overcome credit barriers while managing costs effectively.