Best mortgage lenders for bad credit in 2024

If your credit needs work, that doesn’t necessarily mean you won’t qualify for a mortgage. There are lenders and loan programs for borrowers with bad credit, including FHA loans. Here’s our guide to the best mortgage lenders for bad credit in 2024.

Best mortgage lenders for bad credit

Old National Bank

Learn more in our Bankrate review

• Lender details

  • Availability: All U.S. states
  • Loans offered: Conventional, jumbo, FHA, VA, USDA
  • Credit requirements: 620 for conventional loans, 600 for FHA loans, 620 for VA loans
  • Down payment minimum: Undisclosed
  • Where to find: Branch locations and online

• Pros and cons

  

  Pros

  • Branches plus online banking; first-time homebuyer and down payment/closing cost assistance programs in some states; special loan programs for first responders, professors and physicians

  

  Cons

  • Branch locations limited to five states

Veterans United Home Loans

Learn more in our Bankrate review

• Lender details

  • Availability: All U.S. states
  • Loans offered: Conventional, jumbo, FHA, VA, USDA
  • Credit requirements: 620 for conventional and VA loans
  • Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
  • Where to find: Branch locations and online

• Pros and cons

  

  Pros

  • Specializes in VA loans; 24/7 customer service over the phone; free credit counseling for service members

  

  Cons

  • Doesn’t offer HELOCs or home equity loans; limited number of branches

New American Funding

Learn more in our Bankrate review

• Lender details

  • Availability: All U.S. states except Hawaii and New York
  • Loans offered: Conventional, jumbo, FHA, VA, USDA
  • Credit requirements: 620 for conventional loans
  • Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
  • Where to find: Branch locations and online

• Pros and cons

  

  Pros

  • Displays current mortgage rates online; initiatives that focus on serving minority borrowers, including down payment grants; more than 170 branch locations

  

  Cons

  • Not available in Hawaii or New York

First Mortgage Direct

Learn more in our Bankrate review

• Lender details

  • Availability: All U.S. states
  • Loans offered: Conventional, jumbo, FHA, VA, USDA
  • Credit requirements: 620 for conventional loans, 580 for FHA loans and VA loans
  • Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
  • Where to find: Online

• Pros and cons

  

  Pros

  • Customized online quote tool; no origination or hidden fees

  

  Cons

  • Preapprovals take slightly longer compared to other lenders

U.S. Bank

Learn more in our Bankrate review

• Lender details

  • Availability: All U.S. states
  • Loans offered: Conventional, jumbo, FHA, VA, USDA
  • Credit requirements: 620 for conventional loans, 740 for jumbo loans
  • Down payment minimum: 5% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
  • Where to find: Branch locations and online

• Pros and cons

  

  Pros

  • Several down payment and closing cost assistance programs; discounts for banking customers

  

  Cons

  • Requires a higher credit score to qualify; refinance timeline can be lengthy

Wells Fargo

Learn more in our Bankrate review

• Lender details

  • Availability: All U.S. states
  • Loans offered: Conventional, jumbo, FHA, VA, USDA
  • Credit requirements: 620 for conventional loans
  • Down payment minimum: 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans
  • Where to find: Branch locations and online

• Pros and cons

  

  Pros

  • Displays mortgage rates online; massive branch network; will consider non-traditional credit references in application process; offers low-down payment options to assist lower-income borrowers

  

  Cons

  • Dialed back its mortgage offerings; no longer offers HELOCs; below-average customer satisfaction scores and negative past customer reviews

How a low credit score affects your mortgage

The best interest rates go to borrowers with the strongest credit scores. If you have a lower score, you’ll be quoted higher rates. If you have a lower score, you could spend several thousand more in interest over the life of your mortgage.

Say you’re obtaining a $380,000, 30-year mortgage with a fixed 7 percent rate. Your monthly payment would be $2,528 (excluding homeowners insurance premiums and property taxes), and you’d pay $530,134 in interest over the 30-year loan term.

If you were to improve your credit and get a lower rate of 6.5 percent instead, your monthly payment would drop to $2,402, and you’d pay $484,669 in interest for the duration of the loan. Aside from the monthly payment savings of about $125, that’s a total interest savings of approximately $45,000.

You can use Bankrate’s mortgage calculator to compare different scenarios with higher and lower rates.

How to get a mortgage with bad credit

A bad credit score doesn’t automatically mean you won’t get approved for a mortgage, but you can expect to pay more for the loan. You could also have fewer options to choose from. Follow these tips to boost your approval odds:

• Shop with lenders who specialize in mortgages for borrowers with fair or poor credit.
• Consider using a credit union or online lender, which might have more flexible loan options.
• Look into government-backed loan programs, which might have less stringent qualification criteria.
• Ask a trusted friend or relative with excellent credit to co-sign your mortgage.
• Stop charging with credit cards and refrain from opening any new credit accounts before you apply for your mortgage, as well as during the application process.

FAQ

• What type of mortgage can I qualify for with bad credit?

  If you have poor credit, consider an FHA loan, which allows for credit scores as low as 580 (or 500 if you can make a 10 percent down payment on the home). If you’re eligible, a VA loan (for service members and veterans) or a USDA loan (for buyers in rural areas) might also be easier to qualify for. Be wary of mortgage products that tout “guaranteed approval” without a credit check, or other offers with too-good-to-be-true claims. These are most likely bad actors, and going this route can potentially do more harm to your credit.

• What is the lowest credit score needed for a mortgage?

  The lowest credit score to qualify for a mortgage depends on the loan program and the lender. Conventional loans usually have a minimum credit score of 620, but borrowers with higher credit scores tend to nab better rates. FHA loans have a lower minimum credit score requirement than conventional loans, and might make more sense for you if your credit needs improvement.

• How can I improve my credit score?

  There are many ways to boost your credit score. First, review your three credit reports from the credit reporting bureaus at AnnualCreditReport.com. If you spot any errors or inaccuracies, contact the reporting agency as soon as possible to dispute. Once you have your scores, create a plan of attack for debt. Likewise, be sure to pay all of your bills on time and in full, if possible. While it can be tempting to cut off access completely, close credit cards with caution​​ — your credit score can drop if you close an account. You’re better off simply not using the card, or using it sparingly and paying it back promptly.

• Methodology

  To determine the best mortgage lenders for low-credit score borrowers, Bankrate periodically evaluates more than 80 lenders for factors relating to affordability, availability and borrower experience, assigning each a Bankrate Score out of five stars. The best mortgage lenders for low-credit score borrowers generally have a Bankrate Score of 4.8 stars or higher. Learn more about our methodology.