Real Estate

How to Buy a Second Home With Bad Credit

By Tom Burchnell
buy a second home with bad credit

There are many reasons to consider a second home. Maybe you want an investment property that doubles as a vacation home you can escape to and a rental property when you’re away. Or perhaps you divide your time between two cities and would like to have real estate in each. 

But if you, like more than 35% of Americans, have a lower credit score than you would prefer, you’re probably wondering whether buying a second home with bad credit is even possible. 

The good news is that you may be able to take out a second mortgage despite your credit score. Here’s everything you need to know about buying a second home with poor credit, plus some helpful tips on how to do it.

Can You Buy a Second House With Bad Credit?

Now that we’ve told you some people can become a home buyer with bad credit, you’re probably considering your personal situation and wondering, Can I buy a second home with bad credit

The answer depends on your financial circumstances. In general, you have three main options for buying a second home with bad credit:

  • Cash
  • Conventional loan
  • Home equity loan 

If you’re planning on paying for your second home with cash, your credit score won’t matter very much, if at all. 

Unfortunately, not everyone has stacks of cash on hand. However, you may be able to free up the equity in your home by taking out a home equity loan or seeking a conventional loan to pay for the house. 

Each option will have different requirements, especially concerning credit scores, so let’s go over them.

What Credit Score Is Needed For a Second Home?

The minimum credit score for buying a second home will depend on several factors and can vary from mortgage lender to lender. This is because mortgage lenders are free to decide for themselves what they consider a good or bad credit score.

The exact credit score you need can still depend on what kind of loan you’re trying to get which can affect the loan amount and interest rate. That said, there are certain industry standards that most mortgage lenders adhere to. Here’s the breakdown:

  • Conventional loan – Conventional loans tend to have rather strict requirements when it comes to good credit scores. Most lenders will require a FICO score of greater than 700 for a home loan on a second house, with some requiring a score as great as 750.
  • Home equity loan – If you want to pay for your second house with a home equity loan, you’ll likely need a credit score of at least 680. This can make it difficult to get a home equity loan with bad credit.

But your credit history isn’t the only thing you’ll need to consider when it comes to buying that second house. Keep in mind that most loans for second homes require larger down payments and stronger debt-to-income ratios.

Tips For Buying a Second Home With Bad Credit 

If you have bad credit and you want to buy a second home, you aren’t completely without options. Here are some tips for how to buy a second home with bad credit:

  • Strengthen your credit score – The best way to make buying a second house a viable option is to increase your low credit score. Making all payments on time, resolving accounts that have been sent to collections, and raising your credit limit are just a few of the many ways to do so.
  • Make a larger down payment – If you’re willing to put more money down on a second home, you might have better luck finding a mortgage lender who is willing to issue a loan. Some lenders will accept credit scores of as low as 640 if you make a down payment of at least 25%.
  • Consider less expensive houses – Adjusting your expectations and looking for cheaper options might make paying in cash or making a larger down payment more feasible.
  • Find a co-borrower – Enlisting someone to serve as a co-borrower on your mortgage loan could increase your chances of approval. In some cases, multiple co-borrowers might be a solution. However, co-borrowers will share equally in the ownership of the home.

You’re More Than Your Credit Score 

A bad credit score can stand in the way of achieving many of the financial and life goals you’ve set for yourself, whether that’s buying a second home, saving for your children’s college education, or starting a small business. 

You’re more than your credit report, and a sale-leaseback program looks at your full financial profile because you are a person behind the numbers. A sale-leaseback solution is an alternative to home equity loans, allowing you to sell your house to convert your home equity to cash. While you work toward your financial goals, you can stay on as a renter. Learn more by contacting a financial expert.

Key Takeaways

If you’re looking for options to purchase or rent a second home, a sale-leaseback may be the solution for you. If you are interested in exploring alternative options to purchase a second home with bad credit, consult a financial advisor to discuss your options.


  1. How Many People Have Bad Credit? 
  2. How to Afford a Second Home. 
  3. How to Get A Second Mortgage With Bad Credit. 
  4. Ovmfinancial. Co-Borrower Requirements When Buying a New Home. 
Bad Credit
Second Home
Second Mortgage
Tom Burchnell
Written by Tom Burchnell
Director of Product Marketing

This article is published for educational and informational purposes only. This article is not offered as advice and should not be relied on as such. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process. EasyKnock is not a debt collector, a collection agency, nor a credit counseling service company.