You understand that it is impossible to build equity when paying rent, so you explore your options to purchase a home. But your credit score isn't the best.

So what’s a borrower with a bad credit score to do?

There are still opportunities and options for borrowers who have a credit score of 500 or higher.

It can be tough to buy a house. Modest income, low credit scores, and high home prices can all stand in the way.

But if you find a co-borrower, getting a home loan could be much easier.

A co-borrower applies for the loan with you, and their credit and income can help boost your eligibility.

But that person is also on the hook if you can’t make your mortgage payments. So be sure to check your own financing options first. You might be more qualified to buy a house right now than you think.

There are many scenarios today where co-borrowing can make sense.

• Young buyers in expensive cities
• First-time home buyers with lots of student debt
• People with high debt-to-income ratios (DTI)
• Retirees with little income flow
• Self-employed people without tax returns

For example, maybe you are a young worker who wants to live in a big city where home prices are too high.

Or you recently graduated from college with large amounts of debt from student loans; now you need help qualifying for a mortgage.

On the other hand, say you are a retired parent with little to no income. Getting your adult child to be a co-borrower can help you downsize or purchase another home.

Using a co-borrower might be the only way you can qualify for a home.

But co-borrower relationships can be tricky to navigate. And remember — that person is on the hook if you can’t make your monthly mortgage payments.

So before looking for a co-borrower, see whether you qualify for one of the many first-time home buyer programs available.

Even with a sub-par credit score or modest income, affording a home might be easier than you think.

A non-occupant co-borrower might also be called a “co-signer.” As explained above, this person is legally obligated to assume loan repayment when you cannot. But they are not expected to make any loan payments. They serve as a guarantor on the loan without any ownership interest of the real estate property.

And, unlike an occupant co-borrower, a non-occupant co-signer will not live in the property. This is why many end up cosigning a mortgage with parents.

When a borrower’s credit score is poor and they are not willing to add a co-applicant, they may qualify for alternative loan programs.

If you decide against using a co-borrower, there are other options that may allow you to count roommate or partner income toward your mortgage.

Fannie Mae HomeReady Loan

The Fannie Mae HomeReady Loan option is a low down payment mortgage that lets you use boarder income for up to 30% of the income you need to qualify for the home loan.

Fannie Mae HomeReady loan

• As little as 3% down
• Include a roommate’s income to qualify
• Cover up to 100% of the down payment with gift funds

This could be a good solution for a couple with one partner who has credit issues and cannot qualify for a mortgage.

It would also appeal to a recent graduate with student debt who doesn’t want to share ownership of the home but needs extra income to qualify.

FHA loans or VA loans

FHA and VA loans are government-backed mortgages that have less stringent minimum credit score requirements and flexible guidelines around debt-to-income ratios and down payments.

Both government programs also have different rules for loan qualification and underwriting. So speak with your mortgage lender about these co-borrower alternatives.