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Building a home could take an average of nearly eight months, but a contractor- or owner-built house could stretch the timeline beyond a year.

It’s not as simple as buying a plot of land and heading to Home Depot. Construction permits, financing, and even the weather can lengthen your timeline.

Average Time to Build a House

Despite the extra time it takes to build a home from scratch rather than buy an existing home, it’s no surprise that many Americans are opting to build a home.

Why? To customize a home to their tastes, for one thing. And the narrowing gap between the average cost to build a house and the cost of buying an existing home.

The average cost to build a house, including the land, was nearly $450,000 in May 2022, the National Association of Home Builders reported. The median cost to buy an existing home was a bit over $414,000.

So how long does it take to build a house?

According to the U.S. Census Bureau’s latest home building statistics, from 2021, the average time to build a one-unit residential building is 7.6 months. Here’s the breakdown.

This time frame encompasses the entire home building process, from obtaining building permits to picking out the design.

Factors That Affect How Long It Takes to Build a House

As with everything, the devil is in the details, so let’s look at factors that influence how long it takes to build a home.

Type of House

The type of home and design will have a significant impact on the construction timeline.

If you’re buying new construction, it will fall into one of these categories:

•   Tract homes. These go up in a new development. The buyer chooses the design features and lot.

•   Spec homes. With these move-in-ready homes, the buyer still might be able to choose some of the finishings.

•   Custom homes. A builder customizes a house to the buyers’ specifications on their land.

Predesigned home packages likely accelerate the construction timeline, while custom homes are likely to extend it. After all, custom designs require more coordination between architects, engineers, and contractors.

House Size

Naturally larger homes take longer to build than smaller homes.

If you’re planning on a particularly ornate design, make sure you budget extra time (and money) for the project.

Larger properties with complex layouts are also more likely to encounter greater engineering challenges than simpler layouts. It’s also likely that unanticipated issues will arise during the build.

Location

While scenic, remote areas are attractive to many people seeking to build a primary or vacation home, the locale will heavily affect the ease of transporting materials, workers, and equipment.

Rocky terrain will also be more expensive and difficult to excavate and prep for construction. Installing common utilities will be more difficult.

Weather

Unless you’re looking into a modular home vs. a stick-built home, inclement weather can severely delay construction, as many parts of the process cannot be completed in rain or snow.

Your worksite may get flooded due to lack of completed drainage, and building materials may be damaged if not properly protected.

Financing

Homeowners with sufficient equity in their home could apply for a home equity line of credit to fund their new home.

But many people will seek a construction loan. Obtaining a construction loan comes with its own complications.

Expect underwriting to take longer than it does for a typical mortgage, as the lender will want a detailed plan, budget, and schedule for the construction. The lender may also need to approve your builder.

Permits

Construction permits and zoning approval for home building can be significant time drains and are often beyond your control. A good contingency is to find a contractor who is familiar with the local application process.

Materials and Labor

Volatility in material prices and availability made it hard for contractors to plan projects in 2022. As lumber and plywood prices settled down, cement and diesel costs rose. Shortages in cement and concrete products were expected to endure.

The availability of labor slowed construction starts in 2022 and was expected to remain the top challenge for most contractors.

In general, contractors are particularly busy during the spring and summer, so contracting with a builder before those seasons could be a good idea.

The Process of Building a House

Here’s the typical home construction timeline:

•   Buy land and obtain financing

•   Obtain building permits and approvals

•   Excavate the land and prep the foundation

•   Build the framework and install utilities

•   Put in walls, floors, and roof

•   Install fixtures, appliances, and finish the exterior/interior

•   Landscape, pave driveways, and prepare the grounds

•   Get a final inspection from authorities

Shortening the Time It Takes to Build a House

While much of the home building process is outside your control unless you’re actually building the house yourself, there are ways you can mitigate the chance of complications.

Here are a few ways you can shorten the average time it takes to build a house.

Avoid Deviating From the Plan

One of the best ways to avoid lengthening a construction timeline is to ensure that you have building plans finalized well before you break ground, and sticking to them.

Making last-minute changes is anathema to construction timelines.

Communicate

Avoid being the bottleneck when it comes to decision-making. The construction team will likely take their cues from you. So if you’re late answering an email, design query, or request for approval, your contractor will often be unable to proceed without your input.

Reduce Complexity

Keeping things simple will probably lead to a faster build, if that’s a priority. More complex plans clearly lead to lengthier construction times and introduce a greater likelihood that unforeseen problems will arise.

Craft the Contract With Care

The construction contract should contain a deadline for completion and what will happen in the event of a delay.

It’s common for a contract to specify that “substantial completion” must occur by a certain date, and to define that. A clause can express that extensions can be given for unforeseen delays.

When a change is made after a contract is signed, it’s referred to as a “change order.” The change order might specify a deadline extension or new completion date.

Builders who breach the contract may be responsible for damages.

The Takeaway

How long does it take to build a house? It could take seven to 14 months. A construction contract will typically contain a deadline and what will happen if a delay occurs. Allowing for a reasonable schedule can help ensure that your project finishes on time.

3 Home Loan Tips

1. Traditionally, mortgage lenders like to see a 20% down payment. But some lenders, such as SoFi, allow home mortgage loans with as little as 3% down for qualifying first-time homebuyers.
2. Generally, the lower your debt-to-income ratio, the better loan terms you’ll be offered. One way to improve your ratio is to increase your income (hello, side hustle!). Another way is to consolidate your debt and lower your monthly debt payments.
3. When building a house or buying a nontraditional home (such as a houseboat), you likely won’t be able to get a mortgage. One financing option to consider is a personal loan, which can be faster and easier to secure than a construction loan.

FAQ

How long does it take to build a house by yourself?

For the ambitious home builders among us, it takes over 14 months to build a house, on average. The timeline can easily stretch out to two years or longer, depending on your experience and whether or not you choose to employ any assistance.

What causes delays when building a house?

Plenty of factors can delay a build. They include:

•   Owner-caused delays

•   Contractor-caused delays

•   Weather

•   Logistics

•   Obtaining permits and approvals

•   Size and scale of the project

•   Communication

Can I get a loan to build a house?

You can apply for a construction loan or if you already have a home, a home equity line of credit, home equity loan, or cash-out refinance to fund the new home. A personal loan could be used for at least part of the build.

Photo credit: iStock/acilo

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

This article is not intended to be legal advice. Please consult an attorney for advice.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Long-term personal loans can be an attractive option if you’re facing large expenses like medical bills or home repairs. By spreading out repayment over a longer period of time, long-term loans may allow for lower monthly payment amounts that can make major costs more affordable.

However, long-term loans can have drawbacks, too. They may have higher cumulative interest than short-term loans and can be difficult to qualify for since they’re often unsecured.

Here’s what you need to know if you’re deciding whether or not a long-term, unsecured personal loan is right for you:

What Is a Long-Term Loan?

As its name suggests, a long-term loan is one whose repayment period, or term, is fairly lengthy. Generally, long-term personal loans carry terms between 60 and 84 months, or five to seven years.

Mortgages and private student loans are also examples of long-term loans. Mortgages, for instance, are frequently repaid over as many as 30 years.

For the purposes of this article, we’re talking about long-term, unsecured personal loans, which borrowers can use for a variety of things. These loans can allow consumers to make big purchases or pay expensive bills by paying the total off over several years’ time.


💡 Quick Tip: A low-interest personal loan from SoFi can help you consolidate your debts, lower your monthly payments, and get you out of debt sooner.

Benefits of Long-Term Personal Loans

There are plenty of reasons why a long-term loan might be a worthy consideration for large expenses.

Large Loan Amounts

While short-term loans and credit cards may cap out at a few thousand dollars, long-term, unsecured personal loans are available at much higher amounts — up to as much as $100,000.

So depending on what you need the money for, a long-term personal loan might give you more leverage than other types of funding.

Affordable Monthly Payments

Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan.

However, that doesn’t mean a long-term loan is less expensive in the long run.

Flexibility

Unlike secured loans, which are tied to a physical piece of collateral or the need to be used for a specified purpose, unsecured personal loans can be taken out for a wide range of intended purposes. Common reasons borrowers take out personal loans include:

• Home renovations or repairs.

• Medical expenses.

• Wedding loans or funeral expenses.

• Debt consolidation.

Affordable Monthly Payments

Since long-term personal loans are paid off over many months, the monthly payments are often lower than they would be with a shorter-term loan.

However, that doesn’t mean a long-term loan is less expensive in the long run.

Drawbacks of Long-Term Personal Loans

There are also some drawbacks worth considering before you apply for an unsecured personal loan.

Potentially Higher Interest Rates

Although long-term, unsecured personal loans may have smaller monthly payments, they may carry higher interest rates than shorter-term, unsecured personal loans. And even at the same interest rate, they cost more over time.

Personal loan interest rates can range from as little as 6.99% to as much as 35.99% APR.

For example, imagine you take out a $10,000 loan at an interest rate of 10%. To repay the loan in a single year, you’d have to pay a whopping $879 per month, but you’d only pay a total of $550 in interest over the lifetime of the loan.

To repay the loan in seven years, you’d pay only $166 per month, but you’d also pay $3,945 in interest along the way.

So while long-term, unsecured personal loans can make large purchases feasible, factoring in the total cost over the lifetime of the loan before you sign those papers is also important.

Long-Term Debt

Along with higher interest rates, long-term loans do, obviously, mean going into debt for a longer period of time — unless you plan to pay off your loan early. A thorough review of the loan agreement will disclose prepayment penalties or other fees that can be costly in their own right.

Furthermore, the future is unpredictable. Five to seven years down the line, that promotion you were counting on might fall through or another life circumstance might supersede your repayment plans.

If you find yourself in a situation where you need to borrow more cash, it can be difficult to increase your personal loan amount.

Although unsecured personal loans can be helpful when life throws big expenses your way, they’re still a form of consumer debt, and, ideally, minimizing debt is a smart thing to do.

Qualification Difficulties

Long-term, unsecured personal loans may have more stringent qualification requirements than other types of credit. That’s because, from the lender’s perspective, they’re riskier than loans for smaller amounts or those that come attached to physical collateral.

Along with your credit score and history, a potential lender might also require proof of income and employment or a certain debt-to-income ratio. Depending on the stability of your financial situation, you may or may not qualify for the best interest rates and terms or be considered eligible to take out the loan at all, at least without a cosigner or co-borrower.


💡 Quick Tip: Generally, the larger the personal loan, the bigger the risk for the lender — and the higher the interest rate. So one way to lower your interest rate is to try downsizing your loan amount.

Alternatives to Long-Term Loans

Ideally, the best way to pay for a large purchase is to save up the cash and pay for it without going into debt at all. Of course, this may not always be possible or realistic.

If you’re not sure about taking out a long-term, unsecured personal loan, there are other alternatives to consider. However, each of these comes with its own risk-to-reward ratio as well.

You might consider borrowing money from friends and family, but those important relationships can suffer if your repayment doesn’t go as planned. A written repayment agreement can go a long way toward making the transaction as transparent as possible, with expectations of both parties clearly outlined.

Another option might be saving part of the money you need and applying for a short-term, unsecured personal loan for the remainder. This means delaying a purchase until savings can accumulate, and might not work if the money is needed sooner rather than later.

The Takeaway

Long-term loans are those whose repayment periods generally span between five and seven years, which can help borrowers fund expensive purchases while making affordable monthly payments.

However, the longer-term can also mean more interest charges over time, making these unsecured personal loans more expensive relative to shorter-term lending options. And like any form of consumer debt, they carry risk.

Your credit score and/or financial situation can suffer if you find yourself unable to repay the personal loan.

That said, when used responsibly, long-term, unsecured personal loans can be a smart financial choice, particularly if you shop around for a lender who offers affordable, fixed interest rates, low fees, and great customer service to ensure you’ll always be in the know and in control.

Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.

Photo credit: iStock/Melpomenem

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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Do you want to invest in transportation stocks or a transportation ETF? Here’s everything you need to know to get started investing in transportation.

What’s a duplex? It’s a two-for-one special in the real estate world: two units in one building on one plot of land.

Duplexes are the perfect blend of income production and personal space for some. For others, they may be too small and involve too much maintenance.

Read on to learn what a duplex is and who should consider owning one.

Characteristics of a Duplex

Duplexes, which fall into the multifamily property category, have these common characteristics:

•   Single lot. While there are two units, they’re on the same lot.

•   Shared yard. Duplex units will typically share a yard and will have a common wall or ceiling/floor.

•   Similar size and layout. The two units in a duplex may not be exact replicas, but they often have the same square footage and a similar layout.

Types of Duplexes

Duplexes take one of these forms:

Stacked

When the two units are atop each other, that’s a stacked duplex. Occupants have a common ceiling or floor.

Side-by-Side

In a side-by-side duplex, units are next to each other. Occupants have a shared wall.

In general, the units in a multifamily property have separate entrances, kitchens, bathrooms, and utility meters.

Here’s what a duplex is not: a “twin home.” With a twin home, two homes share a wall, but each is an individually deeded home on an individual lot.

Pros and Cons of Owning a Duplex

Duplex living isn’t for all homeowners but could be the perfect fit for some. Let’s start with some upsides.

Pros of Buying a Duplex

•   House hacking. An owner can live in one unit and rent out the other, earning income to help cover a mortgage.

•   Affordability. Owner-occupants can use a government-backed home loan and enjoy the same low or no down payment requirement that they would with a primary home. Also, duplexes are often located in more affordable neighborhoods, and buying a two-unit property will typically cost less than buying two stand-alone single-family homes.

•   Tax advantages. Owner-occupants can write off mortgage interest and property tax on the half of the property they live in. If the other half is a rental, they can write off repairs to that unit, any utility bills paid for it, and any management fees. The owner can depreciate the rented half of the property.

•   Easy tenant management. For first-time landlords, living in a unit and renting the other one can be a lower-stress alternative to investment property. A resident owner can address issues immediately and keep an eye on ongoing maintenance.

•   Buying property together. Whether it’s friends owning real estate together or a multigenerational household looking for some private space, a duplex might be a perfect fit, as the property is already naturally divided into two. There’s proximity but also space.

•   A boost in getting a mortgage. With conventional or government-backed financing, you can usually use projected rental income to qualify for the loan. The lender will add a portion of the rental income to your gross income to determine your debt-to-income ratio.

Cons of Buying a Duplex

Some drawbacks also exist. They include:

•   Lack of privacy. In a duplex, occupants are on top of each other or right next door. Sharing a wall or ceiling/floor might be hard for some homeowners. If privacy is a priority, a duplex might not be the right fit. That’s also true of co-op and condo living.

•   Possibly a large down payment. If both units will be leased, you won’t qualify for a government-backed loan. You’ll need to put down at least 20% for a conventional loan and will pay a higher interest rate. If you do plan to live in one of the units and use a conventional loan, you may qualify to put 15% down.

•   Tricky taxes. Tax season gets more complicated for duplex owners than owners of traditional single-family homes.

•   Sharing space. Duplex owners may have to share a laundry room or backyard with the other occupants.

•   Landlord duties. Unless a duplex owner purchases the property with another party or has the property managed, they’ll have to serve as landlord for some or all of the home. That means regular maintenance and searching for tenants, which could be stressful for some homeowners.

Recommended: Pros and Cons of Different Types of Homes

Finding a Duplex

Duplexes are enticing to people looking for a starter home, other owner-occupants, and real estate investors, which can make the search much more competitive.

As duplexes are often more expensive than single-family homes, figuring out your budget before the search will help (give this mortgage calculator a whirl), as will having your anticipated down payment at the ready and credit in good shape.

Having financing lined up can make the process more seamless. If the duplex will be owner-occupied, that may help determine which kind of loan to choose among the different mortgage types.

Should you go with a mortgage broker or direct lender? You can get quotes from both.

They should be able to answer your mortgage questions. And it pays to shop around for home loan offers.

Should You Own a Duplex?

Owning a duplex isn’t for everyone, but it could be the place to call home for buyers who want to dip their toes into the investment property market. Although duplexes come with quirks, some benefits (especially rental income) may outweigh the drawbacks.

If you do plan to live at the property, you might eventually outgrow it and move on. In that case, your home equity can help purchase the next home.

And that duplex and other assets can help build generational wealth.

The Takeaway

What is a duplex? Two living units in one property. Duplexes pack a two-for-one punch when it comes to real estate ownership. They aren’t the right fit for all house hunters, but so many buyers are interested in duplexes that they’re a hot ticket.

Ready to start searching for a duplex? Begin the journey with SoFi Mortgages.

SoFi offers mortgages for owner-occupied primary residences, second homes, and investment properties.

FAQ

How can I profit from my duplex?

Duplexes can be either entirely rental properties or owners can choose to occupy one of the units. As an owner-occupant, you can use rent from the other unit to supplement or perhaps pay your monthly mortgage entirely.

As an investment property, you can collect rent on both units, with the profit potential based on the monthly mortgage payment.

How do I rent out a duplex?

There’s a high likelihood you’ll rent out one of the units year-round. However, some duplex owners use the other unit as a guest space, short-term rental, or even an artist studio, depending on their needs.

Should I sell my duplex?

Deciding whether or not to sell your property is a personal choice based on circumstances and the local market. A duplex, though, can be a good property to keep as an investment, as the two units provide a lot of flexibility for renters, Airbnb guests, and an owner’s place to live.

Photo credit: iStock/RichLegg

Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.

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Buying a house with bad credit can be challenging, but it’s doable with planning and preparation. Subprime borrowers — homebuyers with lower credit scores — may be eligible for both federally backed loans and conventional mortgages.

If your credit score is less than stellar but you’re ready to buy a home, it’s important to pause and take stock of your finances. This guide will review strategies and steps to secure a mortgage and buy a house with bad credit.

How to Buy a House With Bad Credit

Lenders will consider a number of factors — not just your credit score — when determining if you’ll be approved for a mortgage. Your debt-to-income ratio and proof of income represent a couple of things you need to buy a house.

Figuring out how to buy a house with a so-called bad credit score can vary on a case-by-case basis. These eight tips will help you assess your financial situation and plan accordingly to buy a house with bad credit.

Recommended: Understanding Mortgage Basics

1. Get Your Credit Reports

As the saying goes, knowledge is power. Assessing your credit is a valuable first step to understand where you stand in qualifying for a mortgage.

A credit report can provide a detailed overview of your creditworthiness, including your total debt, payment history, and age of your credit accounts. You can request free credit reports from this site or once a year directly from each of the three major credit reporting companies: Equifax, Experian, and TransUnion.

Upon receipt of your credit reports, it’s important to review any derogatory marks (e.g., late payments) and check for errors. Addressing mistakes could give a quick boost to your credit score.

Many lenders use the FICO® score model to calculate credit scores, from 300 to 850, and categorize them like this.

It’s not uncommon for your FICO score to differ slightly among the three credit reporting companies, so mortgage lenders take the average or use the middle score.

According to the June 2021 Origination Insight Report by Ellie Mae, the average FICO score ranged from 743 to 753 for mortgages that closed in the first half of 2021. Borrowers with credit scores in this range or higher generally receive the most competitive mortgage rates.

Meanwhile, borrowers with credit scores below 650 represented only 6.2% of mortgages in June 2021.

An estimated 30% of U.S. consumers had credit scores in the subprime range, or less than 670, in Q1 of 2021, Experian found. (There is no universal definition of “subprime.” And Experian sometimes uses the term “nonprime,” for the category of borrowers with scores between 601 and 660.)

2. Plan to Pay a Higher Mortgage Interest Rate

Lenders may consider borrowers with poor credit more likely to default on a mortgage loan. To account for this risk, borrowers with lower credit scores usually face higher interest rates.

A modest increase in the mortgage interest rate can bump up your monthly payment and translate to much more interest paid over the life of the loan. For example, a borrower with a 30-year fixed-rate loan of $250,000 at 5% interest would pay $53,468 more in interest than a borrower with a 4% interest rate.

Paying a higher interest rate may be an unavoidable part of buying a house with bad credit. An option is to refinance your mortgage later to secure a lower rate and save on interest, especially if you make timely payments and improve your credit over time.

3. Pay Your Other Debts

How much debt you have and your ability to pay it is another factor lenders weigh when approving mortgage loans. This is captured through your debt-to-income ratio. Your DTI ratio is your monthly debt obligations divided by your gross monthly income and multiplied by 100.

Higher DTI ratios suggest that borrowers have less ability to make monthly payments. A 43% DTI ratio is usually the highest a borrower can have to obtain a qualified mortgage.

Paying off other debts, like credit cards and student loans, can improve your DTI ratio and signal to lenders that you can afford mortgage payments. Reducing your debt can boost your credit score too by lowering your credit utilization ratio, which is a measure of the amount of available revolving credit you use.

4. Draw Up a Budget

Buying a home is exciting, and it’s easy to lose sight of the true cost of homeownership when shopping for your dream home. But this puts you at risk of becoming “house poor,” meaning you have to spend a disproportionately high share of your monthly income on housing.

Although buying a home is a way to build wealth, having little left over from your paycheck makes it hard to save for retirement and realize other financial goals.

The dreaded B-word, budgeting, is a useful way to ensure that you can afford a home before you walk away with the keys.

An effective budget accounts for both the upfront costs of buying a home (down payment and closing costs) and the long-term expenditures. Besides the loan principal and interest, it’s important to consider property taxes, homeowners insurance, and maintenance, as well as private mortgage insurance (PMI) if you plan to put less than 20% down on a conventional loan, or mortgage insurance premiums (MIP) for an FHA loan, no matter the down payment. They add up, but PMI and MIP allow many people to buy homes who otherwise wouldn’t be able to.

You can get a sense of how much your monthly mortgage payment might be with SoFi’s mortgage calculator tool.

Recommended: Homeownership Resources

5. Save Up a Down Payment

If you’re a buyer with subpar credit, putting more money down on a home can be advantageous. A larger down payment means borrowing less money, making the loan less risky to lenders and improving the chances of qualifying with bad credit. A smaller loan amount also accrues less interest.

But of course, saving up for a down payment can be challenging. If you meet first-time homebuyer qualifications, you may be eligible to receive down payment assistance.

Recommended: First-Time Home Buying Guide

6. Opt for an FHA Loan

Buyers with lower credit scores or less money tucked away for a down payment could benefit from an FHA loan. FHA loans are issued by private lenders but are insured and regulated by the Federal Housing Administration.

Borrowers with credit scores of at least 580 may put just 3.5% down. If your credit score is 500 to 579, you might still qualify, but need to make a 10% down payment. Borrowers who have declared bankruptcy in the past may still qualify for an FHA loan.

Keep in mind that borrowers with higher credit scores who qualify for a conventional (nongovernment) mortgage may put just 3% down.

7. See if You Are Eligible for a VA or USDA Loan

The federal government backs other loan types that can help buyers with fair credit.

Active-duty service members, veterans, or certain surviving spouses may use a VA loan to purchase a primary residence. VA loans usually don’t require a down payment, and the U.S. Department of Veterans Affairs does not set a minimum credit score for eligibility. Lenders have their own requirements, though, so it’s important to compare options.

The U.S. Department of Agriculture guarantees mortgages issued to low- and moderate-income homebuyers in eligible rural areas. No down payment is needed, and the USDA does not specify a credit score requirement. But lenders will still evaluate a borrower’s credit history and ability to pay back the loan.

VA loans typically come with a one-time funding fee that varies; USDA loans, an upfront and annual guarantee fee.

8. Build Up Your Credit Scores

Raising your credit scores can increase your chances of qualifying and securing better loan terms, but it takes time. Negative marks usually stay on your credit reports for seven years.

Paying bills on time, every time, can gradually build up your credit scores. And if possible, it’s a good idea to stay below your credit limits and avoid applying for several credit cards within a short amount of time.

Soft credit inquiries do not affect credit scores, no matter how often they take place. Multiple hard inquiries if you’re rate shopping for an auto loan, mortgage, or private student loan within a short period of time are typically treated as a single inquiry.

But outside of rate shopping, many hard pulls for new credit can lower your credit scores and indicate distress in a lender’s eyes.

The Takeaway

Can you buy a house with bad credit? Yes, but you may have to put more money down or accept a higher interest rate to qualify. If taking steps to improve your credit aren’t enough, you might consider using a cosigner or exploring federal loan programs.

Knowing how to buy a house with bad credit is a good first step to making it happen. You can check out this home loan help center to continue your homebuyer education.

If your financial foundation is feeling pretty firm, consider a home loan with SoFi. Qualifying first-time buyers can put as little as 3% down.

FAQ

Is a 500 credit score enough to buy a house?

Yes, but the options are limited. Borrowers with a credit score of 500 might be able to qualify for an FHA loan.

How can I buy a house with bad credit and income?

Lenders look at your full financial picture, not just credit and income, in a mortgage application. Certain loan types don’t have strict credit or income requirements either.

What is a good down payment for a house with bad credit?

A 20% down payment is ideal, but most borrowers aren’t able to put that much down. Any increase in your down payment could improve your loan terms.

How do I know if I’m eligible for an FHA loan?

FHA loan requirements include proof of employment and the necessary down payment based on the borrower’s credit score (those with scores of 580 or above qualify for the 3.5% down payment advantage). The home must be a primary residence, get appraised by an FHA-approved appraiser, and meet minimum property standards.

Photo credit: iStock/SDI Productions

SoFi Mortgages
Terms, conditions, and state restrictions apply. Not all products are available in all states. See SoFi.com/eligibility for more information.

SoFi Loan Products
SoFi loans are originated by SoFi Bank, N.A., NMLS #696891 (Member FDIC). For additional product-specific legal and licensing information, see SoFi.com/legal. Equal Housing Lender.

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Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.

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