If traditional mortgages are out of reach, researchers point to more "creative" (though often riskier) financing: Hitting the Wall: Credit as an Impediment to Homeownership
Targeted at rural development, these generally require a 640 score, but can offer exceptions for applicants with "compensating factors" like a very low debt-to-income ratio. 2. The "Compensating Factors" Strategy can you buy a house with poor credit
Lenders often look at the "entire financial picture" rather than just the number. Research from OJO Labs highlights that homeownership is "disproportionately difficult" for low-credit groups because they lack visibility into the tools that can offset a bad score. These "compensating factors" include: If traditional mortgages are out of reach, researchers
Backed by the Federal Housing Administration, these allow scores as low as 500 (with a 10% down payment) or 580 (with a 3.5% down payment). Research from OJO Labs highlights that homeownership is
An insightful way to look at this is through the lens of Academic studies, such as those by Rosenthal (2002) and Bostic et al. , suggest that if low-credit households had "unblemished" credit, homeownership rates in the U.S. could increase by roughly 4 to 10 percentage points . 1. Traditional vs. Alternative Loan Paths
