This might be difficult to hear, but if you have a “very” low credit score and high debt, you are not ready to own a home. Homes cost more than the monthly payment. You will have to budget for maintenance and repairs or you will soon be living in a dump, and your high debt is evidence that you don’t have a habit of budgeting at all. So step 1 is learn to spend less than you earn, step 2 stop borrowing, step 3 pay off all existing debt, step 4 save up to at least 5% of the purchase price of the home you want to buy (but 20% is best, if you can).
If you’re currently straining under a lot of debt, and you have bad credit, these steps will seem impossible. I would suggest something I did many years ago, which is a life reset. For me, it lasted about a year and a half - your situation may vary. It’s not fun, but the point is that if you’re disciplined, it is temporary and you will be glad you did it in the end. To reset, sell everything you have except the absolute bare necessities. If you’re young and single, this is easier, but a family CAN do it. I mean, no TV, cheap prepaid phone you barely use, go to the library for internet use, never eat at restaurants or fast food, and keep your groceries simple and cheap, sell your car and buy a cheap ugly one that runs good, cancel everything like Netflix, you don’t get to go out to clubs, concerts, etc., find free things to do for fun. Don’t spend money. If you can find a cheaper place to live, do it. If your living space is something you don’t enjoy, that’s actually good (as long as it’s not unsafe, of course), because if you hate it, you’ll be more motivated to hustle to get out of it. Now, live as cheaply as possible, find ways to increase your income, work extra jobs or overtime... HUSTLE. You have ONE mission: Get out of debt. Everything else is a distraction. Then save your down payment, and don’t forget to also save for closing costs, which you can estimate using the calculator on www.smartasset.com. The good news is that by the time you do all of this, your credit score will be much better. You will think you have no life, but it’s temporary, and if you’ll endure this pain now, the future will be better. If you don’t, you will struggle under the debt cycle your whole life, and that would be worse. Learn all you can about budgeting and money management.
If you move into a barely tolerable, cheap living arrangement, you might consider shortening the amount of time you have to spend there by considering a temporary home purchase (less home than what you ultimately want, but better than a depressing rental or living with your parents). You can usually buy a condo or townhome for far less than a house, so the down payment is less. So live in a barely tolerable arrangement until you can save enough for a cheap condo, but make sure it is one that will hold its value and hopefully increase while you live there. Now you’ve improved your living conditions while you continue to live cheaply and keep on pursuing your ultimate goal. Do resist the urge to furnish and decorate the condo. It’s still just a stop on the way. Just take care of it so you can sell it or rent it out when you’re done.
Good luck! I know you can do this! Anything is possible if you’re willing to try hard enough.
