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10 Best Mortgage Lenders of 2020 for Low or Bad Credit Score Borrowers

A home loan with bad credit is possible, even if you’re a first-time home buyer. Here are mortgage lenders that specialize in serving borrowers with low credit scores.

NerdWalletFebruary 12, 2020
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NOTE: Due to the coronavirus outbreak, obtaining a mortgage may be a bit of a challenge. Lenders are dealing with demand and staffing issues. If you can’t pay your current home loan, refer to our mortgage assistance resource. For the latest information on how to cope with financial stress during this emergency, see NerdWallet’s financial guide to COVID-19.

Your credit score tells lenders how likely you are to pay back the money you borrow. A high score sends all the right signals, while a low credit score, sometimes referred to as “bad credit,” can keep you from getting approved. A bad credit score generally falls below 630.

The credit score needed for a mortgage depends on the type of loan. Government-backed loan programs — FHA, VA and USDA — generally have lower credit-score requirements than conventional mortgages. But it’s the lender that ultimately decides what the minimum credit score will be for each loan product.

If your credit score is at or near lenders’ minimum, they could demand a bigger down payment, charge a higher interest rate or require you to pay more fees. In short, you could end up paying more for your home loan. The best way to avoid these penalties is to elevate your credit score before you apply.

Summary of Best Mortgage Lenders of 2020 for Low or Bad Credit Score Borrowers

Rocket Mortgage by Quicken Loans

at Rocket Mortgage by Quicken Loans

Rocket Mortgage by Quicken Loans: NMLS#3030

4.5

NerdWallet rating 
Rocket Mortgage by Quicken Loans

Min. Credit Score

580

Min. Down Payment

3%

at Rocket Mortgage by Quicken Loans


Why we like it

Good for: borrowers who appreciate smartphone and online convenience for a fully digital home loan experience powered by Quicken Loans.

Pros

  • Caters to self-service users who want to apply for a home loan online and talk to a human only as necessary.

  • Estimates the loan amount you’ll qualify for within minutes.

  • Offers document and asset retrieval capabilities.

Cons

  • If you’re a “look me in the eye” type of customer, you’re out of luck.

  • Getting a customized interest rate requires a credit check, which can lower your credit score by a few points.

Read Full Review
Quicken Loans

at Quicken Loans

Quicken Loans: NMLS#3030

4.5

NerdWallet rating 
Quicken Loans

Min. Credit Score

580

Min. Down Payment

3%

at Quicken Loans


Why we like it

Good for: borrowers looking for just about all of the services your neighborhood lender does — with online convenience.

Pros

  • Quicken Loans couples a fully online application with available mortgage advisors for those who want a human touch.

  • Instantly verifies employment and income for many working Americans.

  • Offers custom fixed-rate loan terms that are between eight and 30 years.

  • Provides a wide variety of loan types, including renovation loans and all government-backed mortgage products.

Cons

  • Quicken Loans doesn't offer home equity loans or HELOCs.

  • Quicken's lender fees can be stout and they don't offset those fees with particularly low mortgage rates.

Read Full Review

Carrington: NMLS#2600

3.0

NerdWallet rating 
Carrington

Min. Credit Score

500

Min. Down Payment

3%


Why we like it

Good for: first-time home buyers or credit-challenged borrowers interested in government loan products.

Pros

  • Offers multiple low-down-payment loan programs.

  • May consider alternative credit data, like bank statements and rent payments.

Cons

  • To get sample rates, you'll have to speak with a loan officer.

  • Doesn't offer home equity loans or HELOC.

Read Full Review
Network Capital

at Network Capital

Network Capital: NMLS#11712

4.5

NerdWallet rating 
Network Capital

Min. Credit Score

640

Min. Down Payment

3%

at Network Capital


Why we like it

Good for: borrowers looking for a lender with online convenience and mortgage banker assistance.

Pros

  • A web application supports the loan process.

  • A good selection of loan products, including all government-backed mortgages.

  • Offers jumbo loans up to $5 million.

Cons

  • Doesn't lend in all states.

  • Website doesn’t provide customized mortgage rates.

Read Full Review

HomeBridge: NMLS#6521

3.5

NerdWallet rating 
HomeBridge

Min. Credit Score

550

Min. Down Payment

3%


Why we like it

Good for borrowers who want a loan officer's help, in person or on the phone, when deciding among the wide range of available mortgage options — including loans to buy and renovate.

Pros

  • Offers a full array of mortgage products, including government and renovation loans.

  • Has loans for most purposes, including purchase, refinance and jumbo mortgages.

  • Online portal keeps borrowers up-to-date on the loan application's progress.

Cons

  • Doesn't post interest rates on its site.

  • Doesn’t offer home equity loans or lines of credit.

Read Full Review

Mr. Cooper: NMLS#2119

3.0

NerdWallet rating 
Mr. Cooper

Min. Credit Score

620

Min. Down Payment

3%


Why we like it

Good for: borrowers looking for lower credit score requirements and those who don’t mind fully remote customer service.

Pros

  • Once your loan is in process, offers a robust digital experience.

  • Will consider alternative credit data for FHA borrowers.

Cons

  • Doesn’t offer an online application.

  • Requires a call or email for personalized rates.

Read Full Review

Citibank: NMLS#412915

5.0

NerdWallet rating 
Citibank

National / Regional

National

Min. Down Payment

3%


Why we like it

Good for: Borrowers wanting to compare mortgage rates online for a variety of loan options.

Pros

  • Offers a wide variety of loan options, including low-down-payment mortgages and jumbo mortgages.

  • Provides customizable mortgage rates on its website.

  • Offers low rates and fees compared with other lenders.

Cons

  • Charges a mortgage application fee.

  • Requires help from a mortgage loan officer to complete the loan application online.

Read Full Review

Navy Federal: NMLS#399807

4.5

NerdWallet rating 
Navy Federal

National / Regional

National

Min. Down Payment

0%


Why we like it

Good for: Military members and their families looking for low-down-payment mortgages.

Pros

  • Offers a wide range of affordable mortgage products designed for military members.

  • Has an online application for preapproval.

  • Offers low rates compared with most lenders.

Cons

  • Website does not provide customized mortgage rates based on credit score or other factors before you apply.

  • Credit union membership is limited to veterans and current military members, their families, and certain federal employees, retirees and contractors.

Read Full Review
BNC National Bank

at BNC National Bank

BNC National Bank: NMLS#418467

4.0

NerdWallet rating 
BNC National Bank

Min. Credit Score

640

Min. Down Payment

3%

at BNC National Bank


Why we like it

Good for: First-time home buyers and others who want low-down-payment loan options.

Pros

  • Wide variety of loan types and products.

  • Improved online capabilities, and robust iOS and Android apps.

  • Considers alternative credit data, like cell phone payments.

Cons

  • Limited number of physical mortgage offices.

  • No rate information is available without beginning an application.

Read Full Review
New American Funding

at New American Funding

New American Funding: NMLS#6606

4.5

NerdWallet rating 
New American Funding

Min. Credit Score

640

Min. Down Payment

3%

National / Regional

National

at New American Funding


Why we like it

Good for: borrowers who need to be evaluated on the basis of nontraditional credit and those interested in various down payment assistance programs.

Pros

  • Uses manual underwriting to evaluate creditworthiness.

  • Offers full online mortgage application, rate quotes, document upload and loan tracking.

Cons

  • Mortgage rates offered to borrowers are higher than the government-reported median of all lenders.

Read Full Review

Low or bad credit score borrower FAQs

Can I get approved for a mortgage with a low credit score?

Absolutely you can. Lenders consider four primary factors when reviewing a mortgage application:

  1. Your credit score.

  2. The amount of debt you carry compared to the income you receive.

  3. How much money you're putting down.

  4. Your employment history.

Two or three positive factors might outweigh a negative one.

Federal and state programs can help borrowers with low or bad credit scores, especially if they’re first-time buyers. Loans backed by the FHA allow for lower credit scores and are easier to qualify for than conventional loans.

Meanwhile, state-sponsored first-time home buyer programs offer down payment assistance and grants to enhance your borrowing power.

What is the best lender for bad credit home loans?

Finding the right lender for you is a matter of choosing the best mortgage for your needs, and then applying to lenders that specialize in that type of business.

If you have a military connection, you'll want a lender that underwrites mortgages backed by the Department of Veterans Affairs, or VA loans.

If you think an FHA home loan is the way to go, you'll seek out high-volume FHA lenders.

To drill down to your best loan options, use NerdWallet's credit score mortgage calculator to discover the loan products best suited for your situation.

Can I get approved for a home loan with a 500 credit score?

If you have a good job history and a bit of money saved for a down payment, it's possible to qualify for a mortgage with a credit score as low as 500. You'll want to talk to lenders specializing in FHA mortgages. Shop around and see which makes you the best offer.

With a FICO score of 500 to 579, you'll likely need to put 10% down to qualify. Improve your credit score to 580 or higher and you may qualify for a loan with a down payment as low as 3.5%.

What is the lowest credit score for a mortgage?

A credit score of 500 is the minimum most lenders will consider. The higher your credit score, the more loan options you'll have — and the lower your down payment can be.

More from NerdWallet

Last updated on February 12, 2020

Methodology

NerdWallet's star ratings for mortgage lenders are awarded based on our evaluation of the products and services each lender offers to consumers who are actively shopping for the best mortgage. The five key areas we evaluated include the variety of loan types and products offered, online conveniences, online mortgage rate information, and the rate spread and origination fee lenders reported in the latest available Home Mortgage Disclosure Act data. To ensure consistency, our ratings are reviewed by multiple people on the NerdWallet Mortgages team.

To recap our selections...

NerdWallet's Best Mortgage Lenders of 2020 for Low or Bad Credit Score Borrowers