How do I buy a bigger home with bad credit?

Written by
bigger home

Buying a bigger home can feel like a daunting and insurmountable task, and with a bad credit score, it becomes even more difficult. Overcoming an obstacle such as bad credit can take time and a lot of effort when it comes to budgeting and controlling your spending. Find out what methods you can take, whether it be building credit or choosing a loan, to buy a bigger home.

How does credit work when buying a home? 

Credit is the modern way for loan companies to assess you. Whenever you are looking to get a loan on a house, or any other big purchase, your credit score will be looked at. 

Essentially the higher your credit score, the better you are known for handling your finances. And if these companies see you have a higher credit score you will be more likely to pay them back on time and be less of a liability. 

Credit scores are not the only thing that will affect your eligibility with many loan offices. Your credit report is a more in-depth look at your credit history. 

Credit reports take a look at any previous loans or lines of credit that have been taken out. Through those, they will assess how they will handle you personally. It’s helpful to learn more about credit reports and how they differ from credit scores.

How to buy a bigger home with bad credit

With today’s circumstances, financial stability is very important. Here are some helpful and insightful ways how you can buy a home with bad credit and stay afloat. 

FHA loan

The Federal Housing Administration (FHA) is the first place to look for first-time home buyers. If you are moving out of an apartment or rented home and looking to purchase for the first time, the FHA is one of the best places to look. 

They have low credit score requirements, with the minimum only being 580. Bear in mind that this loan can only be used to buy a primary residence, not a property that you plan to lease yourself. An FHA Loan is the perfect option for a first-time buyer wanting to get out of a rental into a bigger home but there are some factors that you need to know.


If you are not a first-time buyer and just looking to buy a bigger home, an FHA loan will not be the best option for you. There are other options for loans that are backed by the government such as a Veterans Affairs Loan (VA) or a United States Department of Agriculture Loan (USDA).

There are some stipulations surrounding those such as a VA loan requires you to be a veteran and with USDA Loans you need to be in a qualifying rural area. There are other loan options such as a basic conventional loan which is a loan that is not backed by the government. But for anyone with bad credit, this will either result in denial of your loan or extremely high-interest rates. 


While it may seem obvious, try to set aside as much money as you can and save it for a down payment on your bigger home. A larger down payment can result in lower interest rates.

However, even if you get the same interest rates as a lower down payment, you will have less money overall that you will need to pay off. Since your overall amount that is owed is less, your monthly mortgage payment would then be lower which is perfect for anyone with bad credit or low income. 

Build your credit score

This is the answer that no one wants to hear because building credit can take time and some sacrifice. There are many ways in which you can increase your credit score to reflect better on yourself. The most basic advice for anyone wanting to improve their credit is simply to pay off existing debts, but there is much more you can do. 

What to consider when building your credit score

Building a credit score may seem challenging, but here are some easy ways in which you can increase your credit score and some factors to consider to help speed up the process. 

Increasing credit

This may seem counterintuitive at first glance, but to build your credit score, increasing your credit limit can help immensely. When you have more credit available to you, it shows that you can be trusted with their money. Now, this may not be the first step you take but it can be an important one. 


To get increased credit you have to spend somehow. However, this is not saying that you should go and max out your credit card. The best way to approach spending with credit is not to use it all every month. The percentage that most people suggest spending is around 30% of your credit. A great way to do this is to buy using your credit card to pay for things you already were going to pay for such as gas or a phone bill. 

Credit building programs

There are plans available to specifically build your credit up from where it is now. Typically, there’s a small fee for credit monitoring and a savings account-type loan that helps build your credit score with on-time payments.

Typically, throughout the process of these programs, your progress is reported every month to all 3 credit bureaus. There is usually a one-time fee or small monthly subscription fee for these programs. However, the fee is well worth the money because of how much it will help you over time. 

Beating the system for a bigger home

Buying a bigger home on bad credit is not near impossible. It can be difficult, and it can feel frustrating throughout the process, but tools like credit builder memberships while saving can boost your credit score and plan for a better future.


Can bad credit stop you from getting a house?

The short answer is no. While it can make it difficult there is no credit score that will stop you from getting a mortgage. Although it will likely get you higher interest rates.

Do sellers dislike FHA loans?

An FHA Loan for first time buyers comes with certain requirements that will end in additional inspections that can cost the seller money.

What is considered bad credit?

Any credit score below 600 is considered a bad credit score.

Sign Up
Sign Up
Sign Up