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10 Best Mortgage Lenders of 2020 for Low or Bad Credit Score Borrowers
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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.
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.
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
| Lender | NerdWallet Rating | Minimum Credit Score | Minimum Down Payment | Learn More |
|---|---|---|---|---|
 Rocket Mortgage by Quicken Loans: NMLS#3030 | Best for online experience | 580 | 3% | Read review |
 Quicken Loans: NMLS#3030 | Best for refinancing | 580 | 3% | Read review |
 Vylla: NMLS#2600 | Best for low or bad credit scores overall | 500 | 3% | Read review |
 Network Capital: NMLS#11712 at Network Capital | Best for customer support | 600 | 3% | at Network Capital |
 HomeBridge: NMLS#6521 | Best for customer support | 550 | 3% | Read review |
 Mr. Cooper: NMLS#2119 | Best for refinancing | 620 | 3% | Read review |
 Citibank: NMLS#412915 | Best for low down payment | N/A | 3% | Read review |
 Navy Federal: NMLS#399807 | Best for low down payment | N/A | 0% | Read review |
 BNC National Bank: NMLS#418467 | Best for FHA loans | 640 | 3% | Read review |
 New American Funding: NMLS#6606 | Best for low or bad credit scores overall | 640 | 3% | Read review |
Rocket Mortgage by Quicken Loans: NMLS#3030
Min. Credit Score
Min. Down Payment
Quicken Loans: NMLS#3030
Min. Credit Score
Min. Down Payment
at Network Capital
Network Capital: NMLS#11712
Min. Credit Score
Min. Down Payment
at Network Capital
HomeBridge: NMLS#6521
Min. Credit Score
Min. Down Payment
Mr. Cooper: NMLS#2119
Min. Credit Score
Min. Down Payment
Citibank: NMLS#412915
National / Regional
Min. Down Payment
Navy Federal: NMLS#399807
National / Regional
Min. Down Payment
BNC National Bank: NMLS#418467
Min. Credit Score
Min. Down Payment
New American Funding: NMLS#6606
Min. Credit Score
Min. Down Payment
National / Regional
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:
Your credit score.
The amount of debt you carry compared to the income you receive.
How much money you're putting down.
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.
» MORE: Get your credit score for free
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%.
» MORE: How much house can you afford?
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
- Rocket Mortgage by Quicken Loans: Best for online experience
- Quicken Loans: Best for refinancing
- Vylla: Best for low or bad credit scores overall
- Network Capital: Best for customer support
- HomeBridge: Best for customer support
- Mr. Cooper: Best for refinancing
- Citibank: Best for low down payment
- Navy Federal: Best for low down payment
- BNC National Bank: Best for FHA loans
- New American Funding: Best for low or bad credit scores overall
