Can You Buy a Home with Bad Credit in Minnesota? (2026 Guide)

If you’ve been told your credit isn’t good enough to buy a home, you’re not alone.

This is one of the most common questions I hear from buyers across the Twin Cities:

“Can I actually buy a house with bad credit?”

The short answer is yes. But it depends on your situation, the type of loan you use, and how you structure the deal.

Let’s break it down.

What Is Considered “Bad Credit” When Buying a Home?

In the mortgage world, credit scores are typically grouped like this:

• 740+ → Excellent

• 680–739 → Good

• 620–679 → Fair

• 580–619 → Below average

• Below 580 → Needs improvement

Most people assume you need a 700+ score to buy.

That’s not true.

There are real loan programs that allow you to buy with scores as low as 580, and in some cases even lower with compensating factors.

Loan Options for Buyers with Lower Credit

FHA Loans (Most Common for Lower Credit)

FHA loans are often the best starting point if your credit is below 620.

• Minimum credit score: typically 580

• Down payment: as low as 3.5%

• More flexible with past credit issues

Conventional Loans

Conventional loans are stricter, but still possible:

• Minimum credit score: typically 620

• Minimum down payment: as low as 3%

• Lower long-term costs if you qualify

• Better mortgage insurance options

If you’re close to a 620 score, even a small improvement can open this door.

VA Loans (For Eligible Veterans)

VA loans are one of the strongest options available.

• No down payment required

• Flexible credit guidelines

• No monthly mortgage insurance

If you’re eligible, this should always be explored.

What Matters More Than Just Your Credit Score

Credit is important, but it’s not the only factor.

Lenders also look at:

• Your income stability

• Debt-to-income ratio

• Employment history

• Down payment or reserves

I’ve worked with buyers in the Twin Cities who thought they couldn’t qualify, but once we reviewed the full picture, they were closer than they realized.

The Reality in the Twin Cities Market

Here’s what’s important right now:

• Homes that are priced correctly are still moving quickly

• Sellers want strong, clean offers

• Buyers with a plan have a major advantage

This means your strategy matters more than having perfect credit.

Simple Ways to Improve Your Chances Quickly

If your credit score is holding you back, here are a few things that can help:

Pay Down Credit Cards

Lowering balances can quickly improve your score.

Avoid New Debt

Don’t open new accounts while preparing to buy.

Check Your Credit Report

Errors happen more often than people think.

Don’t Guess

Most people either overestimate or underestimate where they stand.

What I Tell My Clients

You don’t need perfect credit.

You need a clear plan.

Sometimes that plan is:

• Buy now with FHA

• Improve score for 60–90 days

• Structure the deal differently

Every situation is different.

Final Thoughts

If you’ve been waiting because of your credit, don’t assume you’re stuck.

There are real options available right now in Minnesota.

And in a market like the Twin Cities, getting clear on your numbers early can make all the difference.

If you want to take a look at your situation, I’m happy to run the numbers and walk you through your options.

It’s a simple conversation, no pressure, and no impact to your credit.

Chad Krueger
MinnTrust Mortgage
NMLS #400930
📞 612-382-8792
📧 Chad@MinnTrust.com
🌐 www.chadkrueger.com

All loans subject to approval. Equal Housing Lender.