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Many lenders have strict qualifying requirements for mortgage loans, which can make it challenging for borrowers with bad credit to obtain a mortgage. However, if you're a would-be homebuyer looking for the best mortgage lenders for bad credit, there are options out there. A lot of home loans for bad credit are backed by government agencies including the Federal Housing Administration (FHA), the Veteran's Administration (VA), or the U.S. Department of Agriculture (USDA).
Read on to see our shortlist of picks for mortgage companies for bad credit and learn more about getting a mortgage with a low credit score.
Best for: Best for online experience
Ally Mortgage
Bottom Line
Ally is limited in loan options compared to competitors, but it's all about efficiency and a speedy online experience.
Min. Credit Score Minium Credit Score 620 Conventional 700 Jumbo
Min. Down Payment
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for low fees
Bottom Line
No lender fees for existing customers, along with a fully online experience make it a top pick. One of the rare lenders to offer jumbo loans up to $30 million.
Min. Credit Score Minium Credit Score 580 FHA 620 other mortgage products
Min. Down Payment
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for program variation
AmeriSave Mortgage Corporation
Bottom Line
AmeriSave operates in 49 states, allows you to chat online with a mortgage professional, and charges no origination fees.
Min. Credit Score Minium Credit Score 580 FHA 620 other mortgage products
Min. Down Payment Minium Down Payment 0% USDA loans and VA loans 3.5% FHA 3% conventional loans
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for flexible options
Bank of America Mortgage
Bottom Line
Few lenders can match the lineup of loan products and terms, and the interest rate and fee discounts for Preferred Rewards members define what relationship banking should look like.
Min. Credit Score Minium Credit Score 620 FHA 600 Other mortgage products 640 Affordable Loan Solution® 680 Jumbo Loans
Min. Down Payment Minium Down Payment 0% VA loans 3.5% FHA 3% Conventional loans, Affordable Loan Solution® mortgage, Freddie Mac Home Possible® mortgage 5% Other loans
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for custom mortgages
Carrington Mortgage Services
Bottom Line
Carrington has a wide selection of mortgage products and terms, and can find solutions for borrowers with bad credit or nontraditional income.
Min. Credit Score Minium Credit Score 500 VA and USDA 580 FHA 620 Conventional
Min. Down Payment Minium Down Payment 0% VA loans 3% conventional loans 3.5% FHA loans
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for rate lock
Guild Mortgage
Bottom Line
With programs for first-time homebuyers and down payment assistance, Guild is worth checking out for most people, especially first-time buyers.
Min. Credit Score
Min. Down Payment Minium Down Payment 3% Conventional 0%-3.5% FHA, USDA loans, & VA loans
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for past bankruptcy
NASB Mortgage
Bottom Line
The self-employed borrower program may be a great option for people who otherwise have a hard time getting a competitive loan, plus the lender still offers a good range of mortgage programs for other needs.
Min. Credit Score Minium Credit Score 580 FHA Loans 620 for Conventional 660 for VA Loans
Min. Down Payment
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for lender credits and guarantees
PennyMac Mortgage
Bottom Line
By offering rate transparency, online only help, flexible loan terms, and a rate guaranteed to beat competitors, PennyMac is a great place for people to start looking for a mortgage.
Min. Credit Score Minium Credit Score 500 FHA 620 other mortgage products
Min. Down Payment
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
Best for: Best for loan options and online application
Bottom Line
Led the transition to online-only applications, and that seamless process is one reason why it has become the largest U.S. lender. Consistent No. 1 J.D. Power customer service rankings and its high-quality app make it hard to ignore.
Min. Credit Score Minium Credit Score 580 FHA 620 other mortgage products
Min. Down Payment Minium Down Payment 0%-3.5% (FHA & VA loans) 3% (conventional loans)
Key Features
Loan Types
Fixed Rate Terms
Adjustable Rate Terms
While some lenders make conventional loans to home buyers with bad credit, you will often secure more affordable financing if you get a poor credit mortgage insured by a government agency. These mortgages not only have relaxed credit requirements but also require lower down payments than most conventional mortgages do.
There are three primary options for government-backed loans that could be available to borrowers looking for bad credit mortgage loans.
FHA loans are issued by private lenders but backed by the Federal Housing Administration. You can qualify for one with a credit score of 580 and a down payment of 3.5% or with a score as low as 500 and a 10% down payment (some lenders require a higher minimum credit score). There are no minimum income requirements, although lenders must determine if the would-be homeowner has sufficient income to repay the loan.
Compare lenders: Best FHA Lenders
Compare rates: Today's FHA Mortgage Rates
VA loans are also issued by private lenders, but this time the Department of Veterans Affairs guarantees the loan rather than the FHA. There is no minimum credit score requirement imposed by the VA, but each lender has a cutoff. There's also no down payment required unless the home appraises for less than you're paying for it. You do need to be a service member or have a record of military service, although surviving spouses of servicemen and women are also eligible.
Compare lenders: Best VA Loan Lenders
Compare rates: Today's VA Loan Rates
The U.S. Department of Agriculture offers two programs for would-be home buyers. Section 502 Direct Loans are made by the USDA directly and are open only to borrowers with limited incomes who are buying properties in rural areas. The USDA also guarantees loans to borrowers with low incomes, although the income limits are higher for these loans made by private lenders. No down payment is required for USDA loans, interest rates are often below what you'd be charged on a conventional loan, and you can qualify even with imperfect credit.
Compare lenders: Best USDA Mortgage Lenders
First-time home buyers with bad credit may be able to purchase a home. Some lenders offer special first-time buyer programs that have relaxed credit score requirements to qualify. There are even some options for how to buy a house with no credit.
While there are conventional loans for borrowers with imperfect credit, many would-be homeowners do better with government-backed loans. Government agencies guarantee loans in part to help people become first-time homeowners. These include FHA loans, VA loans, and USDA loans.
Each of these government-guaranteed loans comes with relaxed requirements for the credit score needed for a mortgage. FHA loans require a credit score of only 500 with a 10% down payment, and other loans have no credit score requirement at all.
While you can get a mortgage with bad credit, your mortgage will be less expensive and you'll have a broader choice of lenders if you raise your score. There are seven simple steps you can take to help you rebuild credit.
Need a credit card? Check out The Ascent's Total Visa® Review and save this one as your last resort.
Lender | Rating | Best For |
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Rating image, 4.0 out of 5 stars.
4.0 stars
Our ratings are based on a 5 star scale.
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4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
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Best For: Best for online experience | |
Rating image, 4.5 out of 5 stars.
4.5 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for diverse loan terms | |
Rating image, 5.0 out of 5 stars.
5.0 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for low fees | |
AmeriSave Mortgage Corporation
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Rating image, 4.5 out of 5 stars.
4.5 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for program variation |
Rating image, 5.0 out of 5 stars.
5.0 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for flexible options | |
Rating image, 4.0 out of 5 stars.
4.0 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for custom mortgages | |
Rating image, 3.5 out of 5 stars.
3.5 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for rate lock | |
NASB Mortgage
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Rating image, 3.5 out of 5 stars.
3.5 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for past bankruptcy |
Rating image, 4.5 out of 5 stars.
4.5 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for lender credits and guarantees | |
Rating image, 5.0 out of 5 stars.
5.0 stars
Our ratings are based on a 5 star scale.
5 stars equals Best.
4 stars equals Excellent.
3 stars equals Good.
2 stars equals Fair.
1 star equals Poor.
We want your money to work harder for you. Which is why our ratings are biased toward offers that deliver versatility while cutting out-of-pocket costs. |
Best For: Best for loan options and online application |
It is possible to buy a home with a low credit score. Your best option may be to search for an FHA or USDA loan as these government-backed loans tend to be easier to qualify for and often offer the most affordable loans to bad credit borrowers.
In most cases, you will need to make at least a small down payment to buy a home, especially if you have bad credit. If your credit score is at least 580, you may be able to qualify for an FHA loan that enables you to make a down payment as low as 3.5%. The USDA and VA also both allow $0 down payment loan options for qualifying borrowers.
If you're buying a home with a low credit score, here are the key steps you should take:If you're buying a home with a low credit score, here are the key steps you should take:
For most people, an FHA loan is the easiest mortgage to qualify for. FHA loans are guaranteed by the federal government, meaning the government promises to cover the mortgage if you default on the loan. That guarantee allows lenders to be a little more forgiving with requirements.
If you can put 10% down, it's possible to land an FHA mortgage with a credit score as low as 500. But you will probably have to work a little harder to find a lender. Even for an FHA loan with a higher down payment, most lenders require a score of at least 540. With a 3.5% down payment, you'll need a score of at least 580.
The minimum credit score is always at the lender's discretion. There is technically no minimum that applies across the board. Most lenders require a score of at least 580, and some lenders' minimums are even higher. But if your score is lower, you can still find a mortgage.
Programs exist for people with lower scores or even no credit score at all. For example, the FHA program allows you to apply using alternative credit data (rent payments, cell phone payments, etc.) if you can find a lender who will work with you. And many lesser-known mortgage lenders specialize in making conventional loans to people who don't fit the traditional borrower mold, including people with a lower score or no score.
To some extent, this is a situation where money talks. That's because besides your credit score, the lender will look at your financial stability, the size of your down payment, the amount of cash you have in reserve, and how much other debt you have. Generally speaking, if your application is weak in any one area, you can make up for it with a strong showing in the other areas. So if you have a low credit score or no credit score, you will need to bring money to the table and show a history of financial responsibility. The more money you bring, the less of an obstacle your score becomes.
Yes, mortgage interest rates are directly impacted by your credit score. The higher your score, the lower the interest rate you are likely to be offered.
If your credit score is not high enough to land a lower interest rate, consider taking time to boost it. While it won't happen overnight, a higher credit score can save you thousands of dollars over the life of a loan.
Our Mortgages Expert
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