In 2024, over 29% of homebuyers chose FHA loans to buy their homes because they accept credit scores as low as 580. Additionally, VA and USDA loans, with their low credit score requirements, provide even more opportunities to own a home in the Sunshine State.
Houzeo, Florida’s best home-buying website, helps you find an affordable home with ease. You can browse Florida listings within your budget, calculate your mortgage, and submit offers online. It’s a faster, easier way to buy a home—even with bad credit.
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Key Takeaways
- You can buy a house with bad credit in Florida using government-backed loans like FHA, VA, or USDA.
- Correct any credit report errors and actively improve your score before applying for a mortgage – every point counts!
- Offset a low credit score with a higher down payment, or leverage the FHA loan’s 3.5% down option.
- Get pre-approved and lower your debt-to-income ratio to below 36% to significantly improve your chances of qualifying for a mortgage.
- Look for subprime lenders in Florida and local assistance programs that can approve loans based on income/employment, debt ratio, and not just credit score.
How to Buy a Home With Bad Credit in Florida in 5 Steps?
Buying a house in Florida with bad credit may seem like a steep climb, but here’s how you can still buy your dream home:
Step 1: Review Your Credit Score
Before you buy a home with bad credit in Florida, review your credit report for errors and negative marks that could affect your credit score. If you find mistakes on your credit report, you can dispute them directly with the credit bureau.
Step 2: Look for Mortgage Options With Bad Credit
Several mortgage options are available to increase your credit to buy a house in Florida:
- Conventional Loans: The minimum credit score required for conventional loans is 620 for Fannie Mae and 660 for Freddie Mac. However, 3% down is mandatory.
- FHA Loans: These let you buy a home with a credit score as low as 500 (with 10% down) or 580 (with 3.5% down). Ideal for a first-time home buyer with bad credit in Florida.
- VA Loans: VA loans are ideal for active-duty military personnel and their spouses, of whom Florida has the third-largest population in the US. While VA loans have no strict credit score requirement, most lenders prefer a minimum score of 620.
- USDA Loans: These loans encourage homeownership in rural areas. Although they have no minimum credit score requirement, lenders prefer a score of 620 or above. Explore houses for sale in Saint Petersburg if you want to escape the urban rush.
Step 3: Consider Subprime Lenders
Subprime lenders, like Associates Home Loan of Florida, Inc., offer mortgages tailored for people with bad credit in Florida. They evaluate factors such as your employment history, income, and ability to make a down payment, rather than relying solely on your credit score.
Many subprime mortgage lenders accept a debt-to-income (DTI) ratio of 50% or higher, giving more flexibility. This helps those who are buying a home with bad credit in Florida.
Step 4: Save for a Larger Down Payment
For traditional mortgages, the minimum down typically ranges from 3% to 20%. But with a bad credit score, you would probably require at least 10% down. In the current Florida real estate market, a larger down payment improves your chances of securing a loan.
Besides, lenders also view larger down payments favorably. This is helpful if you are looking for high-end properties, as interest can accrue over time. For example, houses for sale in Fort Lauderdale offer several luxury options to explore based on your needs.
Step 5: Get Pre-Approved
Get a mortgage pre-approval on priority, especially if you are a first-time home buyer with low credit in Florida. It can provide clarity on the mortgage interest rate and monthly payments, which can help you plan your finances better.
How to Buy a House With Bad Credit in Florida With Loans?
It can be challenging to get home loans for buying a home with low credit score in Florida. But it is possible if you have the right approach:
- Pay Off Existing Debt: Before buying a home with low credit in Florida, focus on paying back your existing debts. Florida lenders often consider a manageable DTI ratio below 36% as a sign of financial stability.
- Budget Wisely: Factor the cost of living in Florida into your home-buying budget. This includes utilities, insurance, property taxes, and transportation costs.
- Get a Co-Signed Mortgage: Look for a co-signer with a strong credit score to strengthen your loan application. This person will be responsible for paying back the co-signed mortgage if you default on payments.
- Explore Florida-Specific Programs: Organizations like the Florida Housing Finance Corporation run programs to assist local homebuyers with bad credit. If you are looking for affordable housing near urban amenities, check out houses for sale in Pensacola.
- Understand the Mortgage Application Process: Familiarize yourself with Florida’s mortgage requirements, including disclosures and lender criteria. Prepare documents like income proof and credit explanations to strengthen your application.
500 is often the minimum credit score to buy a house in Florida for FHA loans, which goes up to 620 for conventional loans. Knowing the basic requirements for other such programs will help you target the right loan products.
5 Best Bad Credit Mortgage Lenders in Florida
1. New American Funding
New American Funding, a highly regarded lender with a $70 billion home loan portfolio, provides various options for borrowers with less than ideal credit.
- ‘Pathway to Homeownership’ Program: Provides qualified buyers in specific areas with financial assistance of up to $8,000 in down payment and closing costs.
- ‘I Can’ Mortgage Program: Offers a large range of loan options for primary residences, such as single-family homes, townhouses, and condominiums.
Some highlights of New American Funding include:
- No Repayment Required: The assistance provided by the ‘Pathway to Ownership’ Program is not a loan. It does not require repayment for first-time homebuyers.
- 14-Day Closing Guarantee: The lender offers a 14-business-day closing guarantee, which ensures quick credit approvals, streamlined loan processing, and fast underwriting.
- Variety of Mortgage Options: New American Funding provides conforming, government-backed, non-QM, and ADU loans to meet most borrowers’ needs.
Here are a few deal-breakers of New American Funding:
- High Fees: According to customer reviews, the company’s fees are higher than those of other lenders.
- Lender Fees Not Disclosed Online: New American Funding does not provide detailed information about their lender fees on their website.
New American Funding has an impressive rating of 4.7 out of 5 stars, based on 950+ reviews on Trustpilot.
2. AmeriSave Mortgage
AmeriSave Mortgage is an online mortgage lender. The corporation has provided over $130 billion in home loans since their establishment over 20 years ago. They offer:
- Mortgage Rate Buydown Program: With this program, you can lower your mortgage rate by 1 percentage point in the first year. You also get a $750 credit towards a future refinance with them.
- Loans for Bad Credit: The lender offers FHA, VA, and USDA loans for buyers with bad credit. These come with easier credit qualifications and lower down payment requirements than conventional loans.
- ‘Ready Buyer’ Pre-approval: AmeriSave Mortgage boasts a quick pre-approval process, that helps you move quickly when you find the right home.
The following are highlights of AmeriSave Mortgage:
- Attractive Loan Terms: AmeriSave offers a wide range of fixed loan terms with no origination fees and highly competitive rates.
- Quick Pre-qualification: Its fast pre-qualifications, with a custom rate quote and no credit pull, make it easier for buyers with bad credit to explore their options.
- Transparent Pricing: AmeriSave offers a flat-fee structure, which simplifies costs and helps you budget better when purchasing a home.
However, here are some deal-breakers for AmeriSave Mortgage:
- Online-Only Service: AmeriSave has no branch locations, which may be inconvenient.
- Personal Details Required: To view rates, you need to submit your personal information for tailored loan options.
The Better Business Bureau has accredited the lender with an A+ rating. AmeriSave Mortgage also has a rating of 4.5 out of 5 stars, based on 14k+ reviews on Trustpilot.
3. Rate
Formerly known as Guaranteed Rate, it is a leading mortgage lender offering a variety of loan options, including:
- Loan Types: Conventional, FHA, VA, USDA, Jumbo, and more.
- Same Day Mortgage: Expedited loan approval process, potentially closing in as little as 10 days.
- PowerBid Pre-Approval: A robust pre-approval process that strengthens your offer in competitive markets.
The following are highlights of Rate:
- Flexible Credit Options: Accepts credit scores as low as 580 for FHA and VA loans, accommodating a wider range of borrowers.
- Digital Experience: Streamlined online application and document submission process.
- Wide Loan Selection: Offers a variety of loan products to suit different financial needs.
However, there are some dealbreakers for Rate:
- Credit Score Requirements: While FHA and VA loans accept lower scores, conventional loans typically require higher credit scores (often 620 or above).
- Geographical Limitations: Some loan programs may have restrictions based on property location, especially USDA loans which are designated for rural areas.
Borrowers appreciate Guaranteed Rate’s efficient online platform and the clarity of their loan process. Rate also has a rating of 4.1 out of 5 stars, based on 57 reviews on Yelp.
4. Network Capital
Network Capital is a direct mortgage lender offering a variety of loan options, including:
- Loan Types: Conventional, FHA, VA, Jumbo, and more.
- Fast Pre-Qualification: Streamlined process with underwriting typically completed within 24 hours.
- Credit Building Tools: Partnership with ScoreMaster to help borrowers improve their credit scores.
The following are highlights of Network Capital:
- Flexible Credit Options: Accepts credit scores as low as 580+ for FHA and VA loans, accommodating a wider range of borrowers.
- High Customer Satisfaction: Positive reviews with high ratings on Yelp.
- Digital Experience: Offers an online application process for convenience.
However, there are some dealbreakers for Network Capital:
- Limited Branch Locations: There are limited physical branch locations, which may be inconvenient for some borrowers.
- Lack of Information: Website lack loan information, which can be confusing for user.
Borrowers appreciate Network Capital’s efficient online platform and the clarity of their loan process. Rate also has a rating of 3.3 out of 5 stars, based on 194 reviews on Yelp.
5. Guild Mortgage
Guild Mortgage is a nationwide lender offering a variety of loan options, including:
- Loan Types: Conventional, FHA, VA, USDA, Jumbo, Renovation, and Reverse Mortgages.
- Flex Payment Mortgage: A reverse mortgage option with no minimum credit score requirement, designed for homeowners aged 62 and older.
- Complete Rate Program: Allows borrowers without traditional credit scores to qualify using alternative credit data such as rent and utility payment history.
The following are highlights of Guild Mortgage:
- Flexible Credit Options: Accepts credit scores as low as 540 for FHA and USDA loans, accommodating a wider range of borrowers.
- High Customer Satisfaction: Boasts a 4.93/5 rating on Experience.com, reflecting strong customer service.
- Wide Loan Selection: Offers a variety of loan products to suit different financial needs.
However, there are some dealbreakers for Guild Mortgage:
- Limited Online Tools: Does not offer a mobile app, which may be inconvenient for tech-savvy borrowers.
- Interest Rates Not Published Online: Requires contacting a loan officer to obtain rate information
Guild Mortgage also has a rating of 3 out of 5 stars, based on 146 reviews on Yelp.
6 Best Cities in Florida for Buyers With Bad Credit
| City | Best Suited for Bad Credit Buyers | Find Houses for Sale |
|---|---|---|
| Fort Myers | Subprime lenders, FHA, and VA loans | Houses for Sale in Fort Myers |
| Lehigh Acres | USDA loans | Houses for Sale in Lehigh Acres |
| Ormond Beach | USDA loans available for rural areas | Houses for Sale in Ormond Beach |
| Spring Hill | USDA loans available for rural areas | Houses for Sale in Spring Hill |
| Clearwater | FHA loans | Houses for Sale in Clearwater |
| Pensacola | FHA, VA loans, and subprime lenders | Houses for Sale in Pensacola |
Can I Buy a House With Bad Credit in Florida?
Yes! You can buy a house with bad credit in Florida. There are various loan options available for buyers in this situation. FHA loans need a minimum credit score of 580, while VA and USDA loans don’t have strict requirements.
Apart from that, lenders also assess more than just your credit score; they also consider your income, savings, and overall financial situation. So, don’t wait! Make your dream of homeownership in Florida come true today!
