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

NerdWalletFebruary 12, 2020

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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.

» MORE: Start working on your credit score

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

LenderNerdWallet Rating Minimum Credit Score Minimum Down PaymentLearn More

Rocket Mortgage

Best for: online experience

580

3%

Read review

Quicken Loans

Best for: refinancing

580

3%

Read review

Vylla

Best for: low or bad credit scores overall

500

3%

Read review

Network Capital

at Network Capital

Best for: customer support

600

3%

at Network Capital

HomeBridge

Best for: customer support

550

3%

Read review

Mr. Cooper

Best for: refinancing

620

3%

Read review

Citibank

Best for: low down payment

N/A

3%

Read review

Navy Federal

Best for: low down payment

N/A

0%

Read review

BNC National Bank

Best for: FHA loans

640

3%

Read review

New American Funding

Best for: low or bad credit scores overall

640

3%

Read review

Rocket Mortgage: NMLS#3030

Logo

Min. Credit Score

580

Min. Down Payment

3%


Why we like it

Ideal for anyone who appreciates smartphone app service, support and time savings. Rocket Mortgage offers a fully digital home loan experience with a large variety of mortgage products.

Pros

  • The site caters to self-service users who want to apply for a home loan without talking to a human unless it’s absolutely necessary.

  • With your authorization, accesses asset statements from 98% of U.S. financial institutions.

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

  • Rocket Mortgage’s document and asset retrieval capabilities can save you a bunch of time and hassle.

Cons

  • Doesn't offer home equity loans or HELOCs.

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

  • Doesn’t consider alternative credit data. It just looks at credit scores and debt-to-income ratios, the way most mortgage lenders always have.

Read Full Review

Quicken Loans: NMLS#3030

Logo

Min. Credit Score

580

Min. Down Payment

3%


Why we like it

Ideal choice for convenience and quick-response customer service. Quicken Loans provides just about all 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 more than 60% of working Americans.

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

  • Provides FHA-backed loans, USDA loans as well as products offered by Freddie Mac and Fannie Mae that require down payments as low as 3%.

Cons

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

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

  • Doesn’t consider alternative credit data. It just looks at credit scores and debt-to-income ratios, the way most mortgage lenders always have.

Read Full Review

Vylla: NMLS#2600

Logo

Min. Credit Score

500

Min. Down Payment

3%


Why we like it

Ideal for first-time home buyers or credit-challenged borrowers who may have trouble qualifying for a mortgage.

Pros

  • Low minimum credit score.

  • Online application, loan tracking and document upload.

  • Free rate locks.

Cons

  • No online preapproval.

  • No presence in Massachusetts or North Dakota.

Read Full Review
Logo

at Network Capital

Network Capital: NMLS#11712

Logo

Min. Credit Score

600

Min. Down Payment

3%

at Network Capital


Why we like it

Ideal for cost-conscious borrowers looking for a lender with no origination fees and online convenience with mortgage banker assistance.

Pros

  • Charges no lender fees.

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

  • Offers jumbo loans up to $3 million.

Cons

  • Offers no home equity products.

  • Doesn't lend in all states.

Read Full Review

HomeBridge: NMLS#6521

Logo

Min. Credit Score

550

Min. Down Payment

3%


Why we like it

Ideal for borrowers who prefer an online experience. Homebridge offers a variety of home loan options and an online application.

Pros

  • A wide variety of loan types.

  • Low credit score requirements for government-backed loans.

  • A wealth of educational material on its website.

  • Licensed in all 50 states.

Cons

  • Mortgage application can't be tracked online.

  • Charges origination fees on some loans.

  • Limited branch locations.

Read Full Review

Mr. Cooper: NMLS#2119

Logo

Min. Credit Score

620

Min. Down Payment

3%


Why we like it

Ideal for borrowers looking for lower credit score requirements, and who don’t mind remote customer service.

Pros

  • Has low credit score options and will consider alternative credit data for FHA borrowers.

  • Offers a real-time loan application tracker.

  • Has a mobile app that tracks property details after closing.

  • Lends in all 50 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands.

Cons

  • Doesn’t offer an online application.

  • Requires a call or email for personalized rates.

Read Full Review

Citibank: NMLS#412915

Logo

National / Regional

National

Min. Down Payment

3%


Why we like it

Ideal for first-time home buyers or those with weaker credit. Citibank, a large-scale mortgage lender with a full menu of home loan products, offers low down payment options and considers alternative credit data.

Pros

  • Low down payment options.

  • Discounts for Citibank customers.

  • Looks at alternative credit data like rent history and child support payments.

  • Available in all 50 states.

Cons

  • Charges a mortgage application fee.

  • Did not disclose origination fees, which may vary.

  • Can't complete loan online.

Read Full Review

Navy Federal: NMLS#399807

Logo

National / Regional

National

Min. Down Payment

0%


Why we like it

Ideal for military members and their families. Navy Federal Credit Union offers a wide range of mortgage products, an online application and considers alternative credit data for certain loan types.

Pros

  • Wide range of affordable mortgage products designed for military members.

  • Willing to look at nontraditional credit data, such as rent payments, as part of its credit evaluation for certain products.

  • Online application for preapproval with quick decision.

Cons

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

Read Full Review

BNC National Bank: NMLS#418467

Logo

Min. Credit Score

640

Min. Down Payment

3%


Why we like it

Ideal for military members and others who want low-down-payment loan options.

Pros

  • Loan officers are well-versed in VA loan process.

  • Low minimum credit score for government loans.

  • Down payments as low as 3% on conventional loans.

  • Considers alternative credit data, like cell phone payments.

Cons

  • No online preapproval.

  • Typically charges a $1,095 lender fee.

  • Limited number of physical mortgage offices.

Read Full Review

New American Funding: NMLS#6606

Logo

Min. Credit Score

640

Min. Down Payment

3%

National / Regional

National


Why we like it

Ideal for borrowers who need to be evaluated on the basis of nontraditional credit. New American Funding offers FHA and VA loans, works with down payment assistance programs, and helps borrowers whose credit histories don't fit the mold of traditional banking.

Pros

  • Uses manual underwriting to evaluate creditworthiness.

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

  • Home equity lending sets it apart from most non-bank lenders.

Cons

  • Services not available in all 50 states.

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.

» MORE: Down payment assistance: How to get help buying a house

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: The credit score needed to buy a home

More from NerdWallet

Last updated on February 12, 2020

Methodology

NerdWallet's selection of mortgage lenders for inclusion here was made based on our evaluation of the products and services that lenders offer to consumers who are actively shopping for the best mortgage. The six key areas we evaluated include the loan types and loan products offered, online capabilities, online mortgage rate information, customer service and the number of complaints filed with the Consumer Financial Protection Bureau as a percentage of loans issued. We also awarded lenders up to one bonus star for a unique program or borrower focus that set them apart from other lenders. 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

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