It may be challenging to buy a home with poor credit, especially in the Bay Area’s hot seller’s market, but it’s entirely possible. You just need to understand how mortgage lenders evaluate credit, and then you need a few tips for navigating the system.

We’re happy to give you an industry insider’s look at how to buy a home with poor credit.

Increase Your Down Payment

The easiest way to buy a home with poor credit is to increase your down payment amount. A higher down payment gives you a higher financial stake in the home and makes lenders feel more confident that you will repay your mortgage loan.

You might be able to access additional funding for your down payment through:

Down payment assistance programs
Financial gifts from friends or family
Borrowing from your retirement account

Just make sure you keep enough money aside to cover closing costs in addition to the down payment.

Explore Non-Conventional Home Loans

While every lender has its own credit score requirements, most require a score of at least 620 for buyers looking for a conventional loan. But conventional loans aren’t your only option.

FHA loans are a popular alternative, particularly among first-time homebuyers. FHA (Federal Housing Administration) loan started back in the 1930s as a way to make it easier for people to become homeowners. These loans are secured by the US Government, so they are less risky for the lender. This allows lenders to work with buyers who have lower credit scores.

You may be able to qualify for an FHA loan with a credit score as low as 580.

Ways to Quickly Improve Your Credit

Lenders do look at more than just your credit score when evaluating your loan application. So it’s worth speaking with a lender even if your credit score is less than 580.

But if you need to quickly improve your credit score, here are a few ideas that can give you a boost in as little as 30-60 days:

Correct any errors on your credit report. Errors are more common than you might think, and if an error is negatively impacting your credit score, you can quickly improve your score by contacting the credit bureaus to request a correction.
Increase your credit limits. Contact your creditors to request an increase in your credit limit. Your creditors are more likely to agree if you’ve been making payments on time consistently in recent months.
See if you can remove collections records. Contact the collection agencies for any accounts currently in collections and ask if they would be willing to delete the collection record from your credit report in exchange for payment. The collector might even accept partial payment; it can’t hurt to ask.

How Sequoia Can Help You Buy a Home With Poor Credit

Sequoia real estate agents regularly work with buyers who have poor credit to make their homeownership dreams a reality. We’re happy to put you in touch with reputable, local mortgage lenders who can answer all your questions about your unique financial situation and get you on the path to homeownership.