Main Content

5 Steps to Buying a Home With Low or No Credit

Post by Alice Robertson of

Realtor and buyer shaking hands in front of a SOLD sign

Having Low or No Credit Doesn’t Have to Be the End of Your House Hunt

You’ve always dreamed of owning your own home but having no credit or bad credit makes it hard to find a mortgage lender that will approve you. Fear not, there are some things you can do to improve the situation to put you back in the house hunt! Here are a five steps that will help you purchase a home with bad credit or no credit.

  1. Explore Your Home Buying Options

Depending on your financial standing, you may not need to take out a mortgage in order to purchase a home. Instead, you could pursue an alternative route to homeownership, like with cash savings (cash is still king in this real estate market!) or applying to a rent-to-own program. In a rent-to-own program, the money that you spend on monthly payments will gradually accumulate over time to cover your purchase of the home. Programs like this are often open to participants with poor credit or no credit.

  1. Consider Non-traditional Home Loans

In rare cases, you may be able to qualify for a home loan through a specialized program, even if you have no credit. If you can prove that you are financially stable in other respects, and you fulfill other requirements, you may be able to secure a VA loan (for Servicemembers, Veterans, and eligible surviving spouses) or USDA loan (in eligible rural areas). If you are interested in either of these options, you may want to speak with a financial advisor or mortgage counselor to see if you are eligible.

  1. Determine What You Want in a Home

You’ve figured out a viable road to homeownership for your circumstances, and now, it’s time to think about which features you need in your home. Once you’ve determined your needs, you can get a realistic idea of what you can expect to pay for the kind of home you want.

No matter which path to homeownership you choose, it’s important to make sure that you’re getting plenty of value for your purchase. You can use an online home value calculator or consult with the right real estate agent to make sure you’re making a smart investment.

  1. Make Your Strongest Home Offer

    Realtors Peg and Jeremy King showing a buyer a home

While the specifics of this process can vary depending on your approach to homeownership, you will likely need to make an offer on the home you want to buy. You should be prepared to negotiate the specifics and submit an earnest money deposit (EMD). If you are entering a rent-to-own program, this process may differ, so make sure to clarify the details with a program administrator.

  1. Finalize the Process

Even if you’re not buying a home with a traditional mortgage, you’ll still need to walk through several other steps, such as scheduling home inspections, conducting your last walkthrough, and going to an official closing meeting. Keep in contact with your agent throughout this process as they can answer any major questions you may have. Finally, you’ll be ready to get the keys and start moving in!

Keep in mind that if you do plan on purchasing a fixer-upper and the inspection reveals some red flags with your home’s systems and appliances, you’ll likely want to invest in a home warranty. There are many benefits of a home warranty, including getting peace of mind and preserving your budget in case of a breakdown. Before investing in a home warranty, check existing warranties on your appliances.

The Peg and Jeremy King Team Will Help You on Your Path to Homeownership No Matter Your Credit Situation

If you’re struggling to build a strong credit history, rest assured that homeownership is not out of your reach. Your credit score does not have to hold you back from getting the keys to your dream home. With the right approach and the right team, you can achieve your goal of becoming a homeowner!

When you’re ready to purchase your dream Sonoma County home, realtors Peg & Jeremy King can support you through the entire process! Call 707.338.8821

Photo via Pexels