600 Credit Score Mortgage
Can You Get a Mortgage with a 600 Credit Score?
Many prospective home buyers assume that your credit must be in the 600s or 700s to get a mortgage. This is certainly not the case, as many mortgage lenders offer home loans to borrowers with credit scores as low as a 500.
You can get a mortgage to buy a house with a 600 credit score in 2023. Refinancing is also available with a 600 credit score.
Is 600 a Good Credit Score?
A 600 credit score is considered to be “fair” in the eyes of mortgage lenders and also the financial institutions who issue credit cards. Although a 600 credit score will not prevent you from getting a mortgage, the interest rate could be a bit lower.
FHA Loan with 600 Credit Score
The most common type of loan available to borrowers with a 600 credit score is an FHA loan. FHA loans only require that you have a 500 credit score, so with a 600 FICO, you will definitely meet the credit score requirements.
Other FHA loan requirements are that you have at least 2 years of employment, which you will be required to provide 2 years of tax returns, and your 2 most recent pay stubs. The maximum debt-to-income ratio is 43% (unless you have satisfactory “compensating factors”, such as a higher down payment, or cash reserves). Then, the DTI can be up to 56.9%
Something that attracts many borrowers to FHA loans is that the minimum down payment requirement is only 3.5%. This money can also be gifted, or provided through a down payment assistance program.
The program is also available with a rehab component where you borrow the money needed to update the home. This is called the FHA 203k rehab loan.
Would you like to see if you qualify for an FHA loan? We can help match you with a mortgage lender that offers FHA loans in your location.
Click here to get matched with an FHA lender
USDA Loan with 600 Credit Score
The minimum credit score requirement for a USDA loan is now a 640 (for an automated approval). Fortunately, you can still get approved for a USDA loan with a 600 credit score, but it will require a manual approval by an underwriter. In order to get approved with a 600 credit score, expect to have strong “compensating factors”, such as conservative use of credit, 2 months mortgage payments in cash reserves (savings), a low debt-to-income ratio, and/or long job history.
Other requirements for USDA loans are that you purchase a property in an eligible area. USDA loans are only available in rural areas, which includes the outer areas of major cities. You can not get a USDA loan in cities or larger towns (with a population over 30,000 people).
You also will need to show 2 years of consistent employment, and provide the necessary income documentation (2 years tax returns, and 2 recent pay stubs).
Click here to find out if you qualify for a USDA loan
600 Credit Score Mortgage Lenders
Below is a list of some of the best mortgage lenders for borrowers that have a 600 credit score. All of the following lenders offer conventional and FHA loans, and can help you determine what options might be available to you. If you would like some assistance finding a lender, we can help match you with a lender that offers loan options to borrowers with a 600 credit score. To get matched with a mortgage lender, please fill out this form.
1.) New American Funding Contact
2.) Finance of America Contact
5.) Caliber Home Loans Contact
7.) Flagstar Bank Contact
8.) American Financial Network Contact
10.) Loan Depot Contact
The lenders featured above all offer mortgage loans to borrowers with a 600 credit score. If you would like some help finding a lender, we can match you with a lender that offers home loans in your location.
Click here to get matched with a mortgage lender
Refinance with a 600 Credit Score
If you own a home and would like to refinance, you can still do it despite having a 600 credit score. An FHA loan will be the best option and refinancing to reduce your rate and payment should be the focus.
You may also qualify for a cash out refinance if your new loan amount is no more than 80% of the appraised value of the home.
If our current mortgage is an FHA loan, you can get an FHA streamline refinance where the lender does not look at credit. You will get approved if you have been making on time mortgage payments for the past 12 months.
Frequently Asked Questions
How much of a mortgage can I get approved for with a 600 credit score?
The amount you can get approved for is not tied to your credit score. Most of your mortgage approval will be about your income, debt, and the taxes and insurance that you may pay on the home you will eventually purchase. Where the credit score as a slight impact is the interest rate which can reduce your approval amount. This is why focusing on improving credit scores is very important.
Can I get a conventional loan with a 600 credit score?
The minimum credit score required to get a conventional loan is 620. Therefore, you would need to wait until your credit score has increased by at least 20 points before you would be eligible for a conventional loan. If you would like to speak with someone about improving your credit to qualify for a conventional loan, then simply contact us.
Can I Buy a House with a 600 credit Score?
You can buy a house with a 600 credit score with an FHA insured mortgage and a 3.5% down payment. If you are a veteran or active military you can get a VA loan. Finally, USDA loans are available for the purchase of a home in a rural area with credit scores of 600.
Can I get a VA loan with a 600 credit score?
If you are eligible for a VA loan (which are exclusively for veterans), you may be able to qualify with a 600 credit score. In fact, VA loans do not have a minimum credit score requirement.
What if I have had a major credit issue in recent years?
If you have had a bankruptcy, foreclosure, or short sale, there are several lenders that offer non-prime loans to borrowers even just 1 day after such events. These loans after a chapter 7 bankruptcy may require a larger down payment. For a chapter 13, you can qualify with just 3.5% down.
Are there other credit requirements that I should know about?
Most mortgage lenders require that you have 3 trade-lines on your credit report. This can be auto loans, credit cards, personal loans, or other qualifying lines of credit. There can be exceptions to this rule, including alternative bills that are often allowed (phone bills, utilities, etc.).
What are the interest rates for a borrower with a 600 credit score?
The interest rate will depend on type of mortgage program, your individual qualifications, the mortgage lender, and the date you lock your interest rate. We can help connect you with a mortgage lender that offers free rate quotes. To have a mortgage lender contact you, please fill out this form.
Is down payment assistance available to someone with a 600 credit score?
Yes, in fact many down payment assistance programs are available to borrowers with a 600 credit score. The types of programs that exist include both local (city, county, or state level), and nationwide programs. A mortgage lender can help you see if you qualify for down payment assistance. If you have lower income, you are even more likely to qualify, as these programs are often intended for lower income households.