11 Best Bad Credit Home Loans of October 2025
Last updated on October 20, 2025
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Fact Checked
Written by
Lead Writer & Content StrategistReviewed by
Lead Writer & SpokespersonEdited by
Head of Content, Home LoansFact Checked
Fact Checked
Many or all of the products on this page are from partners who compensate us when you click to or take an action on their website, but this does not influence our evaluations or ratings. Our opinions are our own.
Yes, it’s possible to get a mortgage with a 500 credit score. Expect some tradeoffs: You’ll probably need a larger down payment or pay higher interest and fees, and qualifying isn’t guaranteed.
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Why trust NerdWallet
Why trust NerdWallet
- 50+ mortgage lenders reviewed and rated by our team of experts.
- 40+ years of combined experience covering mortgages and financial topics.
- Objective, comprehensive star rating system assessing 120+ categories and 5,000+ data points.
- Governed by NerdWallet's strict guidelines for editorial integrity.
11 Best Bad Credit Home Loans of October 2025
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Lender | NerdWallet Rating | Min. credit score | Min. down payment | Learn more |
|---|---|---|---|---|
580 | 3.5% | |||
600 | 0% | |||
540 | 3.5% | |||
N/A | 0% | |||
520 | 3.5% | |||
580 | 3.5% | |||
500 | 3.5% | |||
580 | 3.5% | |||
500 | 3.5% | |||
620 | 3.5% | |||
600 | 3.5% |
Rate: Best for fast preapproval
- Why we like itRate boasts a streamlined application process, with full underwriting in as little as one business day.Pros
- Fully underwritten mortgage approval in as little as one day for qualified borrowers.
- Generous selection of mortgages, including renovation loans.
ConsRead full review- Doesn't offer customer service chat with a live agent.
Wells Fargo: Best for low-income borrowers
- Why we like itWells Fargo offers low interest rates compared to other VA lenders.Pros
- Interest rates are on the lower end compared to other VA lenders.
- Offers VA Interest Rate Reduction Refinance loans (VA IRRRL).
- Sample interest rates are posted online.
ConsRead full review- Does not offer VA cash-out refinancing.
- Does not offer VA renovation loans.
Guild Mortgage: Best for FHA loans
- Why we like itGuild offers flexibility for borrowers with nontraditional credit. Down payment assistance is generous, especially for low-income borrowers in underserved communities.Pros
- Offers several programs to make homeownership more accessible.
- Offers loans for manufactured homes.
- Renovation loan options are available.
ConsRead full review- Does not publish interest rates online.
- No mortgage mobile app.
- Loans are not available in every state.
State Employees' Credit Union: Best for North Carolina residents
Min. credit score
N/A
Min. down payment
0%
- Why we like itState Employees’ Credit Union in North Carolina is worth checking out for those in the Southeast who meet its narrow membership criteria — especially first-time home buyers eligible for generous grants and specialty loans. But it doesn’t offer government-backed mortgages.Pros
- Offers a zero-down mortgage without private mortgage insurance.
- Participates in multiple first-time buyer assistance programs.
- Low average mortgage rates, according to the latest federal data.
ConsRead full review- Credit union membership eligibility is limited.
- Loans only available in five states.
- Doesn’t offer government-backed mortgages.
loanDepot: Best for fixer-uppers
- Why we like itWorking with LoanDepot partners offers the potential for a streamlined mortgage process and cash back, and the lender offers a wide variety of FHA loan types.Pros
- Offers a variety of repayment terms for fixed-rate loans.
- Does a substantial amount of business in FHA lending.
- mello smartloan product can streamline mortgage application, appraisal and title search.
ConsRead full review- Interest rates are not available on the website.
- Can't apply for a mortgage on the lender's mobile app.
PrimeLending: Best for closing cost assistance
- Why we like itPrimeLending is experienced in financing for fixer-uppers, including 203(k) renovation mortgages, and lends a high volume of FHA loans.Pros
- Offers closing cost assistance.
- Wide variety of loan types, including renovation, refinance and energy-efficient FHA loans.
- Lends a high volume of government-backed loans."
ConsRead full review- Loans are not available in all states.
- Rates are not posted online.
- Does not have a mobile app.
CrossCountry Mortgage: Best for credit scores in the 500’s
- Why we like itCrossCountry Mortgage has a solid variety of FHA loans, as well as impressive down payment assistance programs for first-time buyers.Pros
- Average time to close is 21 days, which is faster than the industry standard.
- Qualified borrowers can receive up to $6,500 in down payment assistance.
- High market share of FHA loans.
ConsRead full review- Doesn’t post rates online.
- No mobile app.
Flagstar: Best for existing Flagstar customers
- Why we like itFlagstar Bank, recently acquired by Mr. Cooper, stands out for its range of accessible loans and programs, including no-down-payment loans, localized loans with flexible requirements and a number of down payment grant options.Pros
- Reported average time to close (20-30 days) is faster than industry standard.
- Offers down payment assistance to first-time home buyers.
ConsRead full review- The lender’s mobile app is focused on banking, not mortgages.
- Some loans and programs are restricted by area.
Carrington: Best for history of bankruptcy or foreclosure
- Why we like itCarrington Mortgage dedicates a large portion of its business to FHA loans and is experienced working with self-employed borrowers and those with heavy debt.Pros
- Considers borrowers with bad credit, foreclosure or bankruptcy.
- Accepts self-employed borrowers.
- FHA interest rates are on the low side, according to the latest federal data.
ConsRead full review- FHA origination fees are on the high side, according to the latest federal data.
- Doesn’t post interest rates online.
- No online chat for customer service.
NBKC: Best for low rates and fees
- Why we like itCommunity bank NBKC has a user-friendly website and low average rates.Pros
- Mortgage rates are on the low side compared to other lenders, according to the latest federal data.
- Offers a strong variety of loan types for purchase and refinance, including fixed- and adjustable-rate loans.
ConsRead full review- Mobile app focuses on online banking, not mortgages.
- You’ll need to share contact information to see customized mortgage rates.
PNC Bank: Best for low or bad credit scores overall
- Why we like itPNC Bank has a variety of appealing mortgage options, including programs for first-time home buyers. It’s simple to browse rates and apply online.Pros
- Offers multiple low-down-payment loan options.
- Customizable mortgage rates are posted online.
ConsRead full review- In-person service is not available in every state.
- You’ll have to supply personal data or account info to get answers by phone.
NOTE: The credit scores in this list represent the most recent information provided to NerdWallet. They are subject to change, and your approval will be based on a variety of factors. To see a lender's credit score minimums for other loan types, tap the "?" in the credit score column.
Low credit home loans: What are my options?
With a 500 credit score, your best bet is probably a government-backed loan. Conventional loans are the most popular type of mortgage, but they typically require a credit score of at least 620.
Common choices include these government-backed loans for bad credit:
Type of loan | Backed by | Focus | Minimum down payment |
|---|---|---|---|
Federal Housing Administration | All home buyers | 3.5% (with a credit score 580+) 10% (with a credit score 500-579) | |
Department of Veterans Affairs | Active military and veterans | 0% | |
U.S. Department of Agriculture | Mostly rural areas | 0% |
MORE NERDY PERSPECTIVE 🤓
 | I have bad credit. Which mortgage is best for me? In most cases, you’ll probably end up looking at FHA loans. You can get an FHA loan with a credit score as low as 500 if you meet other qualifications (like making a 10% down payment). Less common options include special mortgages — not government or conventional — called non-QM loans. My best advice: Talk to a couple of these lenders IRL. Be honest about your overall financial situation. They can’t help you unless they know the full picture, including your debt and savings. - Abby Badach Doyle, Lead Writer, Mortgages |
How to get a home loan with bad credit
Mortgage loans don’t have guaranteed approval. You have to apply and prove that you can pay the loan back. When you apply for a mortgage, lenders want to know your history of handling money. To do that, mortgage lenders look at these four things:
- Your credit score.
- Your debt load compared to what you earn, called your debt-to-income ratio or DTI.
- Your job history.
- The size of your down payment.
If you are weak in one area, a strong point in another might help. Let’s look at what things you can control to help get your loan approved.
🤓
Want personalized advice? Find a housing counselor through the U.S. Department of Housing and Urban Development (HUD) for free or low-cost help. They can help you make a plan to build your credit and buy a house. Nerdy Tip
1. Credit score
Where to start: Before you buy a house, find out your credit score — and how to build it. Need ideas? See our guide to real ways to raise your credit fast.
Your credit score affects which home loans you can get, your interest rate and how much money you need to pay upfront.
You may be able to qualify for a mortgage with a credit score that's as low as 500. However, you might have to make a larger down payment and pay a higher interest rate.
It takes time to bump your credit, but a higher score can help you start off your home loan on better terms. A good credit score to buy a house is at least 620. That saves you money in the long run.
2. Debt-to-income ratio
Where to start: Review your current bills and loans. Then, pay down what you can. See our tips to pay off debt before you take on a big loan like a mortgage.
To figure out your debt-to-income ratio, or DTI, a lender will divide your total monthly bills (like car payments or student loans) by your monthly pre-tax income.
Most lenders will look for a DTI that's 36% or lower (including your housing costs). A lender that allows a higher DTI probably charges higher interest rates.
You can lower your DTI by paying down existing debts. While you're getting ready to buy a house, avoid taking on any more debt or making big purchases.
3. Employment history
Where to start: Avoid making any job changes until after you close on a house. The steadier, the better.
You can't change your work history, but you can do your best to make sure you have a steady job before you apply for a mortgage. (To get a self-employed mortgage, expect to do a little more paperwork.) If you change jobs or get laid off during the mortgage underwriting process, it can be harder to get the loan approved.
4. Down payment
Where to start: Put down as much as you can comfortably afford. To a lender, a larger down payment can offset a lower credit score.
The minimum down payment to buy a house depends on what type of home loan you're getting. You don’t need 20% down to buy a house, but a higher amount will generally get you a better interest rate.
Keep some cash in your emergency savings, but try to put down as much as you can comfortably afford.
State-sponsored first-time home buyer programs offer down payment assistance and grants that can give your savings a boost.
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 and fees to see which mortgage lender is offering you the best deal.
More from NerdWallet:
Fact-checked as of Oct. 20, 2025
Last updated on October 20, 2025
Frequently asked questions
- 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.
- 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.
- 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.
- 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.
Methodology
The star ratings on this page reflect each lender's rating for FHA products (read more about how we determine FHA ratings), conventional loans (read more about how we determine conventional loan 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 40 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 share credit score requirements with NerdWallet and 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.
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 the latest Home Mortgage Disclosure Act data for origination volume, origination fee, average interest rate and share-of-product data.
