How to buy a house — even if you have bad credit 🙌

A mortgage that doesn't check your credit history

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As someone who used to be unhoused, I have never let myself dream of owning my own home. The thought of saving up for a down payment, closing costs, and possible repairs feels daunting. I feel lucky just to qualify to rent an apartment in the first place. Dreaming of owning a home feels way too scary. Not to mention, there are so many hidden costs of homeownership that I know I’m not ready for.

And after talking to hundreds of people about their budgets, I know I’m not alone.

71% of straight and cisgender Americans are homeowners, while only 50% of lesbian, gay, bisexual, and queer people own their homes. On top of that, only 48% of trans or nonbinary people are homeowners, according to the Urban Institute.

According to the Federal Reserve Bank of St. Louis, the median home price in the U.S. was $410,800 in Q2 2025. With the traditional 20% down payment requirement, most hopeful homebuyers need to save a little over $80,000 to afford a $410,800 home. Properties in big cities like New York or Los Angeles, where bigger queer and trans communities tend to live, can cost millions. Most people can’t even save one month’s worth of expenses in their emergency fund.

NACA has been fighting corporate landlords since 1988

Early in 2022, I attended a homebuyers workshop with a nonprofit organization called NACA, the Neighborhood Assistance Corporation of America. They opened the workshop with the org’s history of nonviolent protests against corporate landlords, winning major victories that led to changing the terms of people’s mortgages during the 2008 market crash.

I learned that, in 1995, NACA began offering mortgages to homebuyers without requiring a down payment, closing costs, or a good credit history. It seemed too good to be true. But I have to admit: Naming the systemic barriers to homeownership gave me newfound hope.

I recently spoke with NACA’s founder, Bruce Marks. He said, “People should have the opportunity to have a mortgage payment that’s less than what they’re paying for rent. Because what does that rent do? It’s generating wealth for the already extremely wealthy.”

Here’s what I learned about the NACA mortgage:

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No down payment, PMI, or closing costs

Besides credit history, there are three common barriers to buying a home:

• Down payment: You may be able to put down as little as 3% of the purchase price with a conventional loan. However, you’ll need a minimum down payment of 20% to avoid paying for private mortgage insurance.

• Private mortgage insurance (PMI): Lenders require homebuyers to pay for private mortgage insurance if they take out a conventional loan with less than 20% down. The average PMI is 0.46% to 1.5% of your loan amount, according to the Urban Institute. Let’s say you buy a $450,000 house with a 30-year mortgage, 5% down payment, and 6.5% interest rate. Your monthly payment toward the principal and interest would be $2,702. On top of that amount, you would have to pay $164 to $534 toward PMI each month.

• Closing costs are other fees beyond the down payment, like appraisals and attorneys. The national average for closing costs is $4,661, according to Bankrate, and homebuyers are expected to have that money in cash upfront.

In contrast, the NACA mortgage does not require a down payment, closing costs, or PMI. However, NACA does require homebuyers to have a healthy savings account before starting the process. Marks said, “[It’s] not for a down payment, not for closing costs, not for mortgage insurance. When you close on your home, you’re going to pay in advance for your taxes and insurance. You got to have a few bucks leftover for furniture and things that you want in your new home.”

Similar to NACA, Veteran Affairs (VA) loans also don’t require a down payment and PMI for eligible veterans. The Urban Institute says that Black and Latine borrowers are twice as likely to be approved for a VA loan than a conventional loan. A study by Veterans United Home Loans shows that the homeownership gap between Black and white veterans is 18 percentage points. In comparison, the homeownership gap between Black and white civilians is 30 percentage points.

VA loans also accounted for 11% of new home mortgages in the economic boom after World War II, according to the same study by the Veterans United Home Loans. Marks said, “If you look back, what built the white middle class after World War II? It was the VA no-down-payment mortgage. It was the white middle class because if someone was of color, they couldn’t access those mortgages or purchase in those areas.” Marks told Queer & Trans Wealth that NACA has provided 75,000 mortgages since 1995 and 90% of their homeowners are people of color.

I want y’all to understand what clicked for me while doing this research: Down payments on houses don’t need to exist. In fact, if down payments weren’t required to buy a home, more people of color would be homeowners who build wealth through the value of their homes.

Character-based lending

Marks said, “We never look at anyone’s credit score because those three numbers do not define somebody. So for example, if one has late medical bill payments, that’s not a reflection of whether or not they’re ready for homeownership. That just says we have a dysfunctional, unaffordable healthcare system.”

Traditionally, mortgage lenders use credit history to predict whether or not a borrower will make their mortgage payments on time. But Marks said there are other ways to make sure that NACA’s members can afford their mortgage payments.

“We look at people’s payments that they can control, focusing on the last 12 months,” said Marks. He said that if members are applying for a mortgage whose monthly payments will be higher than their current rent, they require what’s called a payment shock. A payment shock is the difference between their current rent and their desired mortgage payments. NACA financial counselors need to be able to see the payment shock amount deposited into a savings account on a regular basis.

NACA’s focus on character-based lending also solves a problem for trans people with split credit reports due to their legal name change. After a legal name change, trans folx must jump through multiple clerical hoops to make sure that our credit history is transferred from one name to another. When asked if the NACA program is inclusive of trans people, Marks said, “Everybody’s different. Everybody’s going to have unique circumstances, and that’s why the one-on-one [financial] counseling is so crucial.”

Of the 75,000 NACA mortgages that helped people become homeowners, the foreclosure rate is 0.0012%, Mark adds. “We’ve demonstrated that, when you do the right thing, when you have the right mortgage, you do the comprehensive counseling, people make their mortgage payments.”

NACA works with collectives and small business owners

NACA requires homebuyers to prove that they have a stable income to access their mortgages.

In my financial coaching practice, I’ve noticed that many queer and trans folks prefer to start their own small businesses instead of conforming to corporate workplaces. Marks said that NACA accepts proof of income from small business owners, too, in the form of tax returns and cash flow statements.

Queer and trans people are also more likely to embrace communal living with friends and chosen family. I asked Marks how queer and trans collectives might go about the NACA process. He said, “Regardless of what the relationship is, [we look at] who’s going to be in that future household, who’s going to impact the finances of that household.”

NACA mortgages require that the borrower(s) live in the property for the length of the mortgage. This rule safeguards the program from landlords who want to buy homes and flip them for a profit.

The process might take years

During my research, I found YouTube content creators who spoke openly about their experience with the NACA mortgage process.

A YouTuber named Alicia Jay said she started the NACA process in 2021, but she didn’t get qualified for her mortgage until 2025. “I did take a break in the middle because I was so frustrated with the process at one point that I had to take a break. I’m not gonna lie.” She was paired with four different counselors. “Each counselor has so many people who are applying for this mortgage under their belt, and so I am not knocking any of the counselors that I had before the one that I have now.”

Another YouTuber named Brilliant Girl Finance made a video about why the NACA program didn’t work for her. Working as a financial counselor at the time, she put all her expenses — including her rent payments — on a credit card, then paid off the cards in full each month. Even though she paid her bills on time, her counselors wouldn’t qualify her for a mortgage because her credit card spending looked high.

She added, “NACA dropped me like, three times. My application slipped through the cracks. This all started in 2020. By August 2021, I did not have a counselor for four months because one person quit, one person got sick, so it’s a lot of nonsense going on.”

In the comments, @brooklynowns93 said, “As a naca employee, you spoke truth. Appreciate your honesty. However, NACA is 80% do it yourself.” Other members claim they got through the process smoothly within 3 to 6 months.

Other things to consider

• According to Mortgage News Daily, the mortgage rate is 6.13% for a 30-year fixed loan at the time of this writing. In contrast, NACA’s mortgage rate is 5.25%.

• Even though you are prequalified for a NACA mortgage, a seller might decide to go with a buyer who can pay more up front. Work with an in-house NACA realtor to streamline the process.

• Bigger cities like New York, Los Angeles, and San Francisco have more competitive housing markets, so it might be harder to buy a home in those cities using a NACA mortgage. One pro: There are more government down payment assistance programs for first-time home buyers.

There’s a NACA program called HOT-PHA, which stands for Homeownership Through Public Housing Assistance. HOT-PHA allows people who receive Section 8 vouchers from the government to become homeowners, too.