How to Buy a House in South Carolina With Bad Credit in 2025?

In 2024, 20.7% of mortgage applications in the US were denied, primarily due to bad credit scores. However, buying a home with bad credit in the Palmetto State is still possible.

In South Carolina, you can buy a home with bad credit using FHA, VA, or USDA loans. Subprime mortgages are available too, but they often come with higher interest rates. Why wait? Start your homebuying journey today!

👉 South Carolina Homes for Sale: Browse listings and find your dream home today!

Can You Get Loans for Bad Credit in South Carolina?

Yes, you can get loans for bad credit in South Carolina!

A credit score below 580 is considered a poor score. It reflects a history of high debt and missed payments. However, government-backed mortgages have lenient criteria. SC also offers specialized programs to help bad-credit buyers achieve homeownership.

5 Steps to Buy a Home with Bad Credit in South Carolina

16% of Americans have a poor credit score. If you fall into this category, here’s how you can still buy a house with bad credit:

Step 1: Review Your Credit Score

Before buying a house with bad credit in South Carolina, check your credit report for errors and negative marks that may 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

Here’s a list of loans and their minimum requirements:

• Conventional Loans: The minimum credit score required for conventional loans is 620 for Fannie Mae and 660 for Freddie Mac. However, a 3% down payment is mandatory.
• FHA Loans: With FHA loans, you can buy a house with a credit score as low as 500 with a 10% down payment. If your score is 580 or above, you can put 3.5% down. However, you can only use FHA loans to purchase a primary residence.
• VA Loans: VA loans are ideal for active-duty military and their spouses in South Carolina, home to 349,871 veterans. While VA loans have no strict credit score requirement, most lenders prefer a minimum score of 620.
• USDA Loans: The US Department of Agriculture offers USDA loans to encourage homeownership in rural areas like Anderson County, Abbeville County and Greenville County. While the loans don’t have a minimum credit score, lenders prefer a score of 620 or above.

Step 3: Consider Subprime Lenders 

Subprime lenders, such as the South Carolina Federal Credit Union, provide mortgages designed for individuals with poor credit in SC. They evaluate factors such as your employment history, income, and ability to pay down, rather than relying solely on credit scores.

These lenders also provide flexible loan terms and accept a higher debt-to-income ratio, often 50% or more for subprime mortgages. However, DTI requirements can vary by lender and loan type, which makes it easier for you to secure financing.

Step 4: Save for a Larger Down Payment 

For traditional mortgages in South Carolina, the minimum down payment typically ranges from 3% to 20%. However, if you have a bad credit score, a minimum of 10% is usually required.

In the South Carolina real estate market, a larger down payment can improve your chances of securing a loan. Lenders also view this as a sign of financial responsibility.

Step 5: Get Pre-Approved

For first-time home buyers in South Carolina, a mortgage preapproval is important, especially for those with bad credit scores. It informs you about your mortgage interest rate and monthly payments and helps you manage your finances better.

How to Get South Carolina Loans With Bad Credit?

It can be challenging to get a bad credit loans in SC. But it is possible if you have the right approach. Here’s what to do:

• Pay Off Existing Debt: Before you buy a house in South Carolina with bad credit, you should pay back the money you already owe. South Carolina lenders often consider a manageable debt-to-income ratio below 36% as a sign of financial stability.
• Budget Wisely: Factor the cost of living in South Carolina 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 South Carolina-Specific Programs: The South Carolina Federal Credit Union helps buyers with bad credit. It assists low-to-moderate-income residents with lenient credit requirements.
• Understand the Mortgage Application Process: You must be well-versed with South Carolina’s mortgage requirements, including state disclosures and lender criteria. Prepare documents like income proof and credit explanations to strengthen your application with South Carolina lenders.

Can I Get a Mortgage With Bad Credit?

Yes! You can get a mortgage with bad credit in South Carolina. There are various options available for buyers in this situation. FHA loans need a minimum credit score of 500 with a 10% down payment, while VA loans for veterans have no strict credit score 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 South Carolina come true today!

Browse Homes For Sale in South Carolina by Price and Type

Frequently Asked Questions