Steps for Buying a Home if You Have Bad Credit


Are you struggling with bad credit? Do you see your low FICO score as an impossible roadblock on the path to homeownership? At NeighborWorks Orange County, we are here to tell you that homeownership is still possible!  

A low credit score does not close the door on homeownership. 

In fact, we help dozens of families with poor credit successfully achieve the dream of being a homeowner every year. It’s not an overnight process, but there is hope. If you are ready to realize the dream of owning your home, know we have the tools and resources to get you there. 

If you are worried that your credit is limiting your ability to purchase a home, start here:


1) Connect with a Counselor 

Repairing your credit can be an overwhelming process. That’s why we recommend working with our HUD-approved counselors to help you sort through all the pieces. Together, we work through evaluating your credit, and removing errors on your credit report. We also help you avoid making common mistakes that lower your credit, such as opening too many new accounts at once.

Most importantly, we develop a customized credit card action plan outlining your journey to achieving homeownership. This includes specific steps to repairing your credit as well as milestones to reach for your down payment savings. After your session, you will have a clear picture of both where you are today and where you are headed. 


2) Follow the Action Plan 

The biggest take away from your meeting with our counselor will be your action plan. This will establish manageable steps that you can work on over time. But the important thing is to stick to the plan.

When you consistently pay down your bills, you will start to heal some of the damage that lowered your credit score. Additionally, we will help you build in measures to start saving money toward your down payment. It really is a comprehensive plan.

As mentioned, this isn’t an overnight process. Many of the families we work with continue on their plan for 10 to 18 months.


3) Explore Options and Assistance Plans

We offer different mortgage products, grants and programs designed to help families with bad credit realize the dream of homeownership.

To start, we offer the FHA loan. These government-backed loans have less strict guidelines to help our low-to-moderate income clients better qualify for homeownership. This includes lower credit score and smaller down payment requirements.

In addition to the FHA loan, we offer down payment assistance programs. The WISH and IDEA programs match the down payment that a qualified buyer brings to the transaction 3 to 1 for up to $15,000. So if you save $5,000 for purchasing a home, the program will add $15,000 to your down payment. These programs fully forgive all funds after you live in the home for five years.

Our counselors will show you if you qualify for a down payment assistance program.


Start Your Path to Homeownership 

While that may seem daunting today, if you connect with one of our counselors to start your journey, the time will go by faster than you think. When you look at the big picture, it will only be a short time to devote to a very fulfilling goal.

Together we can get you there.

Don’t let the fear of a bad credit score or even a past foreclosure stop you from realizing homeownership. While both are challenges, when you partner with our counselors at NWOC, you can move past them.


Start your journey today