It is indeed possible for a person with a 600 credit score to actually get a home loan. In fact, before the sub-prime mortgage crisis an individual with a credit score of 600 to 640 might be able to get a home loan without the need for a down payment. However, since our economic downturn the mortgage market has changed substantially because the sub-prime scandal. This was caused by borrowers with credit scores ranging from 580 to 620 defaulting on their loans that had low down payments. Many lenders have raised the required credit score to 620 or more while others have stopped offering home loans with no down payments at all because of this mortgage mess.
A person with a 600 credit score is now expected to have to provide at least five percent of the home price as down payment. This is subject to other conditions, such as a good income history, a debt ratio that is less than 45 percent, and no major liens, collections or judgments. Many lenders will also examine where the borrower obtained his down payment. They may also require that the down payment should be completed within 30 to 60 days before closing.
A person with such a credit score who is unable to document a good income history will have to be content with having to pay a down payment of about 15 percent or more of the home value. In fact, it is advisable for a person with a relatively low credit score to move quickly in getting a home loan before the lenders apply even more rigid requirements.