Best Mortgage Lenders for Bad Credit StaffDec. 27, 2019

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Bad Credit
While it used to be difficult to get a loan when you had poor or fair credit, lenders today are more open to the idea of approving loans for people with low credit scores. The right lender can give you competitive terms, low rates, and an easy process all around

It probably won’t come as a shock to you, but having a low credit score can make it tougher to refinance your mortgage. Lenders will tend to see you as more of a risk and act accordingly. That said, too many people seem to assume that average or bad credit is a deal breaker, and this couldn’t be further from the truth.

Let’s take a dive now and see which mortgage lenders are the best for people with bad credit.

Best 5 Mortgage Lenders for Bad Credit

LenderLoan Type
Minimum Credit Score
Get an Offer
FHA, VA, USDA, Conventional
500View Rates
Rocket Mortgage
Fixed, ARM, Jumbo, FHA, VA, USDA, Refinance
580View Rates
FHA Rate Guide
FHA, VA, Conventional
Not SpecifedView Rates
Paramount Bank
FHA, VA, 203k loans
Not publishedView Rates
Home refinance, new purchase
620 for most loansView Rates

Can I Get a Loan with Bad Credit?

The obvious question most people with bad credit have is “can I get a loan if my credit score is low?” The answer is a resounding yes; you simply need to know where to look. There are several reasons for having bad credit, including:

  • Never building your credit in the first place
  • Missing monthly payments or having outstanding debt or bills
  • Filing for bankruptcy

The former reason gives you a lot more leverage to work with since it means you haven’t been delinquent, just never established your own credit. This could be because you are too young (students), are/were serving in the armed forces, or simply never thought to take out a line of credit. In these cases, lenders are certainly more willing to work with you as you pose no high risk to them. The other 2 reasons are trickier, but you can still be approved for a loan, though the terms will generally vary from a typical loan. Lenders will also take into consideration just how low your score is before making an offer. That being said, the bad credit mortgage market has opened up over the past few years, making it more competitive and driving down the rates. These are all good things for you.

Mortgage Options for People with Bad Credit

People with bad credit often don't have the disposable income to provide a substantial down payment on their homes. For this reason, alternative home loans are offered to this clientele. For example, FHA loan providers can give you a down payment of as low as 3.5%. VA lenders offer fee waivers and lower interest rates and require no down payment. You have a lot of options in terms of the types of home loans available to you even with bad credit.

  • Federal Housing Administration (FHA) Loan

If you’re a first time home-buyer you can apply for a Federal Housing Administration (FHA) loan even with a credit score as low as 580. The loans are insured by the FHA and allow first time homebuyers to get a mortgage with a down payments as low as 3.5% if you have a credit score of 580 or higher. Keep in mind though you will have to pay private mortgage insurance (because of the low credit score), which can be around 1.75% of the loan amount upfront plus .85 percent annually. FHA loans are popular for all type of borrowers, including people looking to get a loan for mobile and manufactured homes.

  • Veterans Affairs Home Loan

If you are a current or former member of the armed forces, you can apply for a Veterans Affairs home loanA VA loan allows you to finance 100% of the cost of the house with zero down payment. You also won’t need to pay monthly mortgage insurance, but most people who sign a VA loan are required to pay a funding fee of 2.15%. Typically you can get one even with less than ideal credit, though this may affect the terms of your loan.

  • USDA Loan

If you live are looking for a single family house in a rural area you can get a loan with the United States Department of Agriculture (USDA). These are fixed rate, low interest loans that aren’t typically as stringent about your credit history, and do not require a  down payment. You will need to be someone who lacks “decent, safe and sanitary housing,” in order to qualify, and you need to buy in a rural area with 35,000 residents or less.

  • Conventional Loan (Conventional 97)

A credit score of as low as 620 can be enough to qualify for a conventional loan that is financed up to 97%. These are loans that aren't funded by the government and usually have a higher interest rate.

  • Home Equity Loan

If you already have a house with equity on it, then you can reply for a home equity loan, even with poor credit. Basically, you’re borrowing against the equity in your own home, which can be a good option if you’re credit is boxing you out elsewhere.

  • Co-signers

Not every lender allows it, but a co-signed loan can be a solid way to get a mortgage even if your credit is in bad shape. Basically, with a cosigned loan, you find someone with good credit - typically a close relative - who has good or better credit and is willing to sign off on the loan. The only drawback is that if you default, the co-signer is on the hook for the loan as well, and could suffer a hit to their credit rating.

  • Rent to Own Lease

Repairing your credit can take time, and by doing so, you can improve your ability to get a loan. One way to buy yourself some time is with a rent to own lease, which allows you to pay rent and live in the home with the option to buy it later. In the meantime, you can repair your credit and get better terms when you’re ready to sign for a mortgage.

  • Home Loan after Bankruptcy

A bankruptcy is by no means the end of it all, and you can still own real estate again down the road someday. Called “second chance home loans,” these deals can help you get a mortgage after you’ve taken the time to repair your finances - usually at least a year or two.

  • Homeownership and Opportunity for People Everywhere (Hope I)

With a HOPE I loan through the Department of Housing and Urban Development, low-income people living in public housing units can become homeowners, even with bad credit or low income.

  • Fannie Mae HomeReady Program

If you have at least a 620 credit score you may qualify for a HomeReady loan through Fannie Mae. These loans can come with down payments as low as 3 percent, and can even be given to people with no credit history at all, as long as they have a history of making bill payments like rent and car notes.

The Top 5 Lenders

1. LendingTree


Minimum credit score: 500+ for 10% down payment, 580+ for 3.5% down payment

Minimum down payment: 3.5% for FHA loans

  • Multiple lenders to easily compare offers
  • Mortgage loan calculator
  • Sleek mobile app

LendingTree is a well-known name in the finance industry, and it's a name people like. That's because, with one application, you instantly get access to a huge network of lenders all competing for your business. And, as LendingTree's slogan goes, "When banks compete, you win!" LendingTree partners with some major players in the lending world such as Discover Card. Additionally, because this company partners with so many lenders across the spectrum, you can find just about any type of loan, terms, and options. That means you are more likely to find a suitable loan option that works for your situation and needs.

LendingTree also has helpful online tools like loan and mortgage calculators to help you estimate what price range you can afford to buy a house in, and how much your monthly payments will be based on your inputted information. These are invaluable tools that really give consumers a more educated perspective on buying a home. Learn more about LendingTree’s easy online process.

Biggest Perk: Widest variety of lenders with a single application

LendingTree LendingTree View Rates

2. Rocket Mortgage

Rocket Mortgage

  • Online and mobile lender
  • Quick application process
  • Offers same suite of products as owner Quicken Loans

Rocket Mortgage is Quicken Loans’ online and mobile lender, allowing borrowers to access and apply for all the usual Quicken Loans products and rates without leaving the comfort of their own home (or home office). For a conventional loan with 20% down payment, borrowers will usually need to have a good credit score of 700 or higher, although loans may be available for scores of as low as 620. The lowest Rocket can offer for FHA loans is a 3.5% down payment with minimum 580 credit score.

Rocket Mortgage Rocket Mortgage View Rates

3. FHA Rate Guide

FHA Rate Guide

  • No minimum credit score
  • No maximum loan amount
  • No minimum down payment

FHA Rate Guide is ideal for homeowners who need to borrow money against their home at the same time as refinancing, and want to see as many options as possible. FHA Rate Guide has a longer than usual set of application questions, including your income, the type and value of your property, and the size of your down payment or amount that remains on your mortgage. FHA Rate Guide invites you to borrow extra cash against the property when you take a mortgage or refinancing loan.

FHA Rate Guide FHA Rate Guide View Rates

4. Paramount Bank

Paramount Bank

  • Pre-approval
  • Lots of educational info available online
  • Strong financial institution

As a pillar of the financial industry, Paramount Bank has been providing banking services for half a century. Today, the company is also an HUD-approved lender with Fannie Mae/Freddie Mac agency products aplenty. Paramount Bank is also delegated FHA/VA, FHA 203K, and USDA-approved. In short, this is a company that you can trust.

Paramount Bank offers a simple process: apply, upload documents, review loan details, and close. It’s simple, it’s fast, and it’s understandable.

Paramount Bank Paramount Bank View Rates

5. Credible


  • Compare rates and fees across lenders
  • Digital application process automates document collection
  • Complete the entire origination process through Credible’s mortgage marketplace builds on the success of the company's marketplaces for student loans, student loan refinancing, and personal loans, which have facilitated more than $1.6 billion in loans. Credible’s integrations with lenders and credit bureaus make it a snap to compare actual, prequalified rates across multiple lenders without impacting your credit score, and you don’t have to worry that your personal information will be shared with any lender other than the one you choose to work with. Once you see an option you like, Credible’s streamlined process and licensed loan officers provide a seamless experience all the way to closing.

Credible Credible View Rates

How to Refinance with Bad Credit

If you’re thinking of refinancing your mortgage then you probably already know the potential benefits - lower interest rates and payments, a shorter payment term, using some of your equity, consolidating debt, and more.

But how do you refinance with bad credit?

If you’ve been making mortgage and credit payments regularly and your credit has improved you’ll be in better shape, but even if not, you have options.

Besides repairing your credit or using a co-signer, you can pursue a number of government programs that can help you refinance and stay in better financial shape.

  • HARP

The Home Affordable Refinance Program can help people with Freddie Mac or Fannie Mae mortgages get better terms on their monthly mortgage payment. You need to have had no late mortgage payments for 6 months and little or no equity and live in a home which has decreased in value in order to qualify.

  • FHA

People who have a Federal Housing Administration mortgage you can use the FHA program in order to refinance your mortgage, without having to do a credit check. This can really help you get better terms on your FHA mortgage, which tend to be low down payment with high monthly payments.

  • Home Equity Loan and HELOC

If your home has built up equity then you can use that equity to refinance your mortgage even if your credit is less than stellar.

What Rates to Expect

Of course, having bad credit does come with some drawbacks, and that usually comes in the form of higher interest rates or monthly payments. The plus side here is that FHA, VA, and other government-regulated loans are required to charge lower interest rates, helping people with bad credit afford their loans. For the average 30-year fixed rate loan, borrowers with bad credit can expect to pay approximately 5.481% APR. However, FHA loans can run as low as 3.5% if you have a score of 580 or higher. Lower than that, and you might pay as much as 10% APR.

Rates will vary significantly, though, depending on your individual circumstances, loan terms, and lender. It’s a good idea to compare various offers from several lenders before signing on a loan. You can also get a better rate by paying a larger down payment. This initial payment will lower your loan amount and rates.


Having a low credit score doesn’t mean that you can’t get a good loan--it just means you need to come to the right place. Look into the right government-backed programs, as well as into lenders with rates geared especially for getting a mortgage with bad credit. The best lenders for low credit will take into account your overall lifestyle when offering you rates so you can find a mortgage that works for you.