Title: Can You Buy a Home with a 580 Credit Score?
Yeah, I've crunched those numbers a few times—sometimes out of curiosity, sometimes just to see how much that lower score actually cost me. Here’s what I’ve noticed after a handful of deals and running the math on my own purchases:
- PMI adds up fast. With a 580 score, you’re almost always looking at FHA loans, which means you’re stuck with mortgage insurance for a while. On a $250k loan, that’s easily $150+ a month, every month, for years.
- Interest rate difference is brutal. Even a 1% higher rate can mean tens of thousands extra over 30 years. For example, 6.5% vs. 5.5% on $250k is about $160 more per month. Over 5 years, that’s nearly $10k—money you’ll never see again.
- Refinancing isn’t always a slam dunk. Lenders want to see your credit bounce back and some equity built up. If the market shifts or your credit doesn’t improve, you’re stuck paying more for longer than you planned.
- Waiting can be smart, but there’s a tradeoff. Home prices and rents both keep climbing. If you wait 2-3 years to save up or fix credit, the house you want might be out of reach—or rents eat up your savings anyway.
I get the stress part. I’ve bought with a low score before and felt like I was bleeding money on PMI and interest. But I’ve also seen folks wait too long and get priced out entirely. There’s no perfect answer, but yeah, the extra costs are real and add up faster than most people expect.
If I could go back, I’d probably try to at least get my score up into the mid-600s before pulling the trigger. That little bump can save a ton over the life of the loan... but then again, if prices jump 20% while you wait, it’s a wash.
It’s one of those “pick your poison” situations. Just wish lenders were a little less punishing for folks trying to get started.
I hear you on the PMI and interest—those numbers sting. I’ve watched buyers jump in with a 580, just because they were tired of renting, and yeah, the monthly costs are no joke. But sometimes, waiting isn’t a luxury if rents are eating you alive or your lease is up. I’ve seen folks get creative—co-signers, gift funds, even buying with a partner to boost the credit profile. Ever looked into those down payment assistance programs? Some of them can offset the pain a bit, but they come with their own strings attached. Curious if anyone here actually made it work with one of those options...
I actually went down the down payment assistance rabbit hole last year when my lease was ending and rent was about to jump again. The city program looked promising—low interest, forgivable after a few years, all that. But once I dug into the fine print, it got complicated fast. There were income caps, required classes, and a bunch of paperwork. Plus, the seller had to agree to certain terms and not every lender wanted to deal with it. I ended up passing because the timeline didn’t work for me, but I know someone who managed to pull it off by stacking a couple programs together.
One thing I’m still not clear on: if you use these programs and then want to refinance or sell before the forgiveness period is up, does that mess things up financially? Like, do you have to pay it all back at once? That’s always made me nervous about locking myself in.
That’s a really common concern, and honestly, you’re right to be cautious. Most of those down payment assistance programs do require you to pay back the assistance if you sell or refinance before the forgiveness period is up. Sometimes it’s the full amount, sometimes it’s prorated depending on how long you’ve lived there. It can definitely throw a wrench in your plans if you need to move unexpectedly or want to take advantage of lower rates later.
I’ve seen clients get caught off guard by this—one couple had to pay back their entire assistance loan when they sold after three years instead of five. The paperwork can be a headache too, especially if you’re trying to coordinate with multiple programs at once.
Have you looked into whether any of these programs have exceptions for hardship or job relocation? Some cities are more flexible than others, but it’s not always clear from the start. Curious if anyone here has actually managed to get out early without a big penalty...
I’ve seen this play out a few times—folks get excited about those assistance programs, but the fine print is a killer. One buyer I worked with had to move for a job after just two years, and the city wouldn’t budge on the payback. They tried to claim hardship, but the process was so drawn out they just gave up and paid. Honestly, unless you’re dead sure you’ll stay put for the full term, it’s a gamble. The rules sound flexible in theory, but in practice? Not so much.
