Getting approved for a mortgage with a 600 credit score is challenging but possible with the right approach and loan program. Here’s how to maximize your approval chances:
1. Focus on FHA loans – With a 600 credit score, FHA loans are your best option as they allow credit scores as low as 580 with a 3.5% down payment. Some lenders may approve scores as low as 500 with 10% down.
2. Strengthen other qualification factors:
- Lower your DTI ratio – Aim for a debt-to-income ratio below 43% (total monthly debts including future mortgage payment divided by monthly gross income)
- Save for a larger down payment – While FHA allows 3.5% down, offering 5-10% improves approval odds significantly
- Demonstrate income stability – Lenders prefer borrowers with at least 2 years at the same employer or in the same industry
- Build cash reserves – Having 2-3 months of mortgage payments in savings after closing costs shows financial stability
3. Consider alternative loan options:
- VA loans – If you’re eligible based on military service, VA loans have more flexible credit requirements
- USDA loans – For properties in eligible rural areas, though these typically prefer scores above 640
- Non-QM loans – Non-qualified mortgage products for borrowers with unique situations (though with higher interest rates)
4. Work with the right lender – Look for mortgage brokers specializing in helping borrowers with lower credit scores or community banks and credit unions that offer manual underwriting rather than just automated approvals. Be prepared for higher interest rates compared to borrowers with excellent credit.