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. Here’s our guide to the best mortgage lenders for bad-credit borrowers in 2024.
Best mortgage lenders for bad credit
Lender | Credit requirements | Down payment minimum | Bankrate Score |
|---|---|---|---|
Old National Bank | 620 for conventional loans, 640 for FHA loans, 680 for VA loans | Undisclosed | 4.6 |
Veterans United Home Loans | 620 for conventional and VA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.9 |
New American Funding | 620 for conventional loans | 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.8 |
First Mortgage Direct | 620 for conventional loans, 580 for FHA and VA loans | 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.8 |
U.S. Bank | 620 for conventional loans, 740 for jumbo loans | 5% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.8 |
Wells Fargo | 620 for conventional loans | 3% for conventional loans, 3.5% for FHA loans, none for VA and USDA loans | 4.8 |
Old National Bank
Learn morein our Bankrate review
Lender details
Availability: All U.S. states
Loans offered: Conventional, jumbo, FHA, VA, USDA
Credit requirements: 620 for conventional loans, 640 for FHA loans, 680 for VA loans
Down payment minimum: Undisclosed
Where to find: Branch locations and online
Pros and cons
Green circle with a checkmark inside 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
Red circle with an X inside Cons
Branch locations limited to five states
Veterans United Home Loans
Learn morein 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
Green circle with a checkmark inside Pros
Specializes in VA loans; 24/7 customer service over the phone; free credit counseling for service members
Red circle with an X inside Cons
Doesn’t offer HELOCs or home equity loans; limited number of branches
New American Funding
Learn morein 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
Green circle with a checkmark inside Pros
Displays current mortgage rates online; initiatives that focus on serving minority borrowers, including down payment grants; more than 170 branch locations
Red circle with an X inside Cons
Not available in Hawaii or New York
First Mortgage Direct
Learn morein 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
Green circle with a checkmark inside Pros
Customized online quote tool; no origination or hidden fees
Red circle with an X inside Cons
Preapprovals take slightly longer compared to other lenders
U.S. Bank
Learn morein 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
Green circle with a checkmark inside Pros
Several down payment and closing cost assistance programs; discounts for banking customers
Red circle with an X inside Cons
Requires a higher credit score to qualify; refinance timeline can be lengthy
Wells Fargo
Learn morein 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
Green circle with a checkmark inside 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
Red circle with an X inside 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 $350,000, 30-year mortgage with a fixed 7.6 percent rate. Your monthly payment would be $2,447 (excluding homeowners insurance premiums and property taxes), and you’d pay $531,258 in interest over the 30-year loan term.
If you were to improve your credit and get a lower rate of 6.9 percent instead, your monthly payment would drop to $2,305, and you’d pay $479,920 in interest for the duration of the loan. That’s a cost savings of approximately $50,000.
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.
FAQs
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.
