13 Best Mortgage Lenders of 2023 for Low or Bad Credit Score Borrowers
A home loan with bad credit is possible, even if you’re a first-time home buyer. These low credit score mortgage lenders specialize in serving borrowers with credit challenges.
Some or all of the mortgage lenders featured on our site are advertising partners of NerdWallet, but this does not influence our evaluations, lender star ratings or the order in which lenders are listed on the page. Our opinions are our own. Here is a list of our partners.
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. When it comes to buying a home, a bad credit score generally falls below 620.
The credit score needed to buy a house 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.
Lenders consider more than just credit score when evaluating a mortgage applicant. If your credit score is at or near a lender's 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.
Some lenders in the list below have not provided minimum credit scores to NerdWallet, but still offer loan programs that may fit the needs of borrowers with lower credit. The star ratings shown are specific to the product with the lowest specified credit score minimum (for example, FHA or VA loans).
Best Mortgage Lenders of 2023 for Low or Bad Credit Score Borrowers
Lender ▾ ▾ | NerdWallet Rating ▾ ▾ | Min. credit score ▾ ▾ | Min. down payment ▾ ▾ | Learn more |
|---|---|---|---|---|
4.0 /5 | 580 | 3.5% | Learn moreat New American Funding at New American Funding | |
3.5 /5 | 620 | 3.5% | Learn moreat Northpointe at Northpointe | |
3.5 /5 | 580 | 3.5% | ||
 Fairway Independent Mortgage: NMLS#2289 Learn moreat Fairway Independent Mortgage at Fairway Independent Mortgage | 3.5 /5 | 580 | 3.5% | Learn moreat Fairway Independent Mortgage at Fairway Independent Mortgage |
3.5 /5 | 580 | 3.5% |
- Offers a wide variety of purchase and refinance mortgages with an emphasis on helping underserved communities.
- Its home equity line of credit can be used for an owner-occupied or second home.
- Offers a program to enable buyers to make cash offers.
- Mortgage origination fees tend to be on the high end, according to the latest federal data.
- A full slate of loan offerings.
- Offers a no-down-payment loan with a shorter repayment term that helps accelerate home equity accumulation.
- Digital conveniences include a mobile app.
- You’ll need to provide contact information or speak to a loan officer for customized mortgage rates.
- Origination fees are on the high side, according to the latest data.
- Offers extensive educational resources for military borrowers.
- Participates in some down payment assistance and first-time home buyer programs.
- No mortgage rates displayed online.
- Doesn’t offer home equity loans or lines of credit.
Fairway Independent Mortgage: NMLS#2289
580
3.5%
- Offers a robust suite of loan products, including ITIN loans for borrowers without Social Security numbers, renovation loans, government-backed mortgages and loans for self-employed borrowers.
- Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
- Mortgage rates for different types of loans aren't posted online.
- Origination fees are on the high side compared with other lenders, according to the latest federal data.
- Offers a wide range of loan types and products, including FHA, VA and USDA.
- Borrowers can apply and track loan status online.
- Offers customized online rate quotes with monthly payment estimates, including mortgage insurance, when applicable.
- Home equity loans are geographically limited.
- Origination fees are on the high side compared with other lenders, according to the latest federal data.
- Has branches across the country for customers who prefer face-to-face service.
- Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
- Mortgage interest rates tend to be on the lower end, according to the latest federal data.
- Mortgage rates aren't available online; you'll need to contact a loan officer.
- Doesn't offer home equity loans or lines of credit.
- Offers multiple low-down-payment loan programs.
- May consider alternative credit data, such as bank statements.
- You can view customized rates for purchasing a home and apply online.
- Doesn't offer home equity lines of credit.
- Lender fees are on the high side, according to the latest federal data.
- Offers a wide variety of mortgage loan types and products.
- Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
- Doesn't display information online about rates and fees.
- Mortgage origination fees are on the high side, according to the latest federal data.
- Offers an ITIN qualification path for borrowers ineligible for Social Security numbers.
- Has a digital application process.
- Offers government-backed mortgage options for low- to moderate-income borrowers.
- No mortgage rates published online.
- No home equity loans or lines of credit.
- Generally has higher rates and fees than other lenders.
- Branch offices not available in all states.
- Offers a wide variety of loan options, including low-down-payment mortgages and jumbo mortgages.
- Offers low rates compared with other lenders, according to the latest data.
- Receives high marks for customer satisfaction, according to J.D. Power and Zillow.
- Requires help from a loan officer to complete an online mortgage application.
- Customized mortgage rates not available without making contact.
- Doesn’t offer renovation loans.
- Offers a full array of mortgage products, including government and renovation loans.
- Online portal keeps borrowers up to date on the loan application's progress.
- Offers home equity lines of credit, or HELOCs.
- Doesn't post interest rates on its site.
- Lender fees are on the high side, according to the latest federal data.
- Convenient online application and loan process updates.
- Offers a variety of mortgage options, including FHA, VA and USDA loans.
- Mortgage interest rates aren't published online.
- Doesn’t offer home equity loans or lines of credit.
- Lender fees are on the high side, according to the latest federal data.
- Online capabilities include a full application, as well as loan process updates.
- Offers low rates compared with other lenders, according to the latest federal data.
- Watermark’s mortgage interest rates are not published online.
- Watermark says it offers HELOCs, but no details are available online.
NOTE: The minimum credit scores displayed above represent the most recent information provided to NerdWallet by each lender, and they are subject to change. The credit score shown is each lender's lowest minimum requirement across common loan types. To see a lender's minimum credit scores for specific types of home loans, click or tap the "?" next to that lender's displayed minimum credit score. Bear in mind that credit score isn't the sole factor determining whether a lender will deem a borrower qualified — variables like debt-to-income ratio and down payment amount are important, too.
How to get a mortgage with a low or bad credit score
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, also called your debt-to-income ratio or DTI.
Your employment history.
The size of your down payment.
Two or three positive factors might outweigh a negative one. Here's what you can do to improve each of them and bolster your chances of getting approved for a mortgage.
1. Credit score
Your credit score can determine what types of home loans you're eligible for, how high an interest rate you'll be offered and how large a down payment you have to make.
Though you may be able to qualify for a mortgage with a credit score that's as low as 500, you would need to be able to make a 10% down payment — and you probably wouldn't get a great interest rate.
Improving your credit takes time, but a higher score can help you start off your home loan on better terms, saving you money in the long run.
» MORE: 8 ways to build credit fast
2. Debt-to-income ratio
To calculate your debt-to-income ratio, or DTI, a lender will divide the total of your monthly debt obligations (things like car payments or student loans) by your monthly pretax income.
Most lenders will look for a DTI that's 36% or lower (including your housing costs). A lender that qualifies you with a higher DTI is probably charging you a higher interest rate.
You can lower your DTI by paying down existing debts. While you're getting ready to buy a house, and during the homebuying process, you should avoid taking on any additional debts or making any major purchases.
3. Employment history
You can't change your employment history, but you can do your best to make sure your employment status is steady before you begin applying for mortgages. If you change jobs during the underwriting period, it can impact how much a lender is willing to loan you.
» MORE: What is mortgage underwriting?
4. Down payment
The amount of down payment you'll need depends on what type of home loan you're getting. If you are affiliated with the military, you may be able to qualify for a mortgage backed by the Department of Veterans Affairs. VA loans allow zero down payment. USDA loans, which are insured by the U.S. Department of Agriculture and meant to help lower-income borrowers living outside of urban areas, also have no down payment requirement.
Loans backed by the Federal Housing Administration can be beneficial to borrowers with lower credit scores because FHA loans tend to allow lower minimum credit scores. If your credit score is at least 580, you may be able to make a down payment that is as low as 3.5%. FHA loans also allow borrowers to use gift money to go toward the down payment.
If you are able to make a higher down payment, that may help offset a lower credit score in the eyes of your lender. State-sponsored first-time home buyer programs offer down payment assistance and grants that can enhance your borrowing power.
» MORE: How to get help buying a house
The bottom line? Shop around. You may qualify for a home loan with some lenders but not others, and you'll want to compare the different offers. Look closely at the rates, fees and other requirements to see which mortgage lender is offering you the best deal.
More from NerdWallet:
Last updated on June 1, 2023
Methodology
The star ratings on this page reflect each lender's rating for FHA products (read more about how we determine FHA ratings) or VA products (read more about how we determine VA ratings). The lenders on this page are chosen using this methodology:
NerdWallet reviewed more than 50 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (lenders had to have at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country.
For inclusion in this roundup, lenders need to offer at least one loan product where the stated credit score minimum is 600 or lower. Additionally, the lender must offer at least one product or feature that accommodates borrowers with lower credit scores. This product or feature needs to be in addition to or separate from offering government-backed loans. Lenders that offer a loan product or feature that accommodates borrowers with lower credit scores but do not provide NerdWallet with minimum credit scores for all products or loan types can be included.
NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews. We also utilized 2021 Home Mortgage Disclosure Act data for origination volume, origination fee, average interest rate and share-of-product data.
NerdWallet's Best Mortgage Lenders of 2023 for Low or Bad Credit Score Borrowers
- New American Funding: Best for low or bad credit scores overall
- Northpointe: Best for first-time home buyers
- Caliber: Best for VA loans
- Fairway Independent Mortgage: Best for self-employed borrowers
- Flagstar: Best for digital convenience
- loanDepot: Best for renovation loans
- Carrington: Best for low or bad credit scores overall
- CrossCountry Mortgage: Best for variety of loan types
- Alterra: Best for nontraditional credit
- Citibank: Best for low down payment
- Homebridge: Best for customer support
- Sebonic Financial: Best for ease of application
- Watermark Home Loans: Best for FHA loans
Frequently asked questions
- Can I get a home loan with a 500 credit score?
A 500 is the absolute lowest credit score needed to buy a house. On paper, that score enables you to qualify for a loan backed by the Federal Housing Administration with a 10% down payment. In reality, however, few lenders will accept a score that low. Bringing up your credit score can give you more loan options, get you a lower interest rate and allow you to make a smaller down payment.
- What mortgage lenders will work with bad credit?
Mortgage lenders' requirements for borrowers vary, but if you have bad credit you should look for lenders that are willing to consider alternative credit data. That means they will review aspects of your financial situation, like on-time rent and utility payments, that aren’t normally reported to the credit bureaus. You'll have to provide the lender with documentation of this info.
- Can you still get a mortgage with a low credit score?
Yes. Having a stable employment history and saving up a larger down payment can help offset a weaker credit score. Some kinds of mortgages, like FHA loans, have lower minimum credit score requirements. That said, if you can build your credit first, it will help you not only get a mortgage but also get a better interest rate. That can potentially save you thousands of dollars.
- What is the easiest mortgage to qualify for?
The easiest mortgage to qualify for depends on you. While FHA loans are known for allowing lower minimum credit scores, a VA loan or a USDA loan may be easier to qualify for if you fit their requirements. For a VA loan you need to be an active or retired member of the military or a military spouse. USDA loans have income and location requirements.
