A low credit score does not automatically shut you out of a mortgage. Several major lenders publish FHA requirements in the 500s, and VA loans have no program-level minimum credit score. Some lenders still set stricter rules, so the lender you choose can matter almost as much as the loan program.
There is also an important 2026 change for conventional borrowers. Fannie Mae removed its old 620 minimum credit score requirement for loans evaluated through Desktop Underwriter in November 2025. That does not mean every borrower below 620 will qualify, since lenders can still set their own requirements and Fannie Mae still evaluates overall credit risk.
We compared the lenders below based on published credit score requirements, loan choices for borrowers with weaker credit, down payment rules, underwriting flexibility, and borrower access. Credit flexibility received the most weight because that is the main reason someone with bad credit would choose one lender over another.
8 Best Mortgage Lenders for People with Bad Credit
The best lender depends on your credit score, down payment, military eligibility, income, debt, and recent credit history.
Here are the top mortgage lenders to consider if you’re buying a home with bad credit in 2026.
1. Rate: Best for FHA and VA Credit Flexibility
Rate stands out because it publishes a 500 minimum credit score for FHA loans and says it does not set a minimum credit score for VA loans.
2. Carrington Mortgage Services: Best for Low Credit Scores and Non-QM Loans
Carrington Mortgage Services is one of the strongest lenders for borrowers who fall outside standard mortgage guidelines.
3. Guild Mortgage: Best for Government-Backed Loans With Low Credit Scores
Guild Mortgage publishes some of the lowest credit score requirements among large mortgage lenders.
4. New American Funding: Best for FHA Borrowers With a Credit Score as Low as 500
New American Funding is a nationwide lender offering a wide range of loan options, including programs for borrowers with low credit scores or nontraditional income.
5. Rocket Mortgage: Best for a Fully Online Mortgage Process
Rocket Mortgage is a strong fit for borrowers who want to handle the mortgage process online.
6. PennyMac: Best for FHA and VA Borrowers With a Credit Score of 580
PennyMac offers a strong digital mortgage process and clear credit guidelines for government-backed loans.
7. Sage Home Loans: Best for a Simple Online Application
Sage Home Loans offers an online mortgage process with fast prequalification and digital document handling.
8. Veterans United Home Loans: Best for VA Borrowers With a Credit Score of 620 or Higher
Veterans United Home Loans specializes in VA mortgages for veterans, active-duty service members, and other eligible borrowers.
Minimum credit score requirements can change and do not guarantee approval. Lenders also review income, debt-to-income ratio, cash reserves, down payment, property type, loan amount, and recent payment history.
How We Chose the Best Mortgage Lenders for Bad Credit
A lender should earn a place on this list because it gives a lower-credit borrower a meaningful advantage. We gave the most weight to the following factors.
- Credit flexibility: We favored lenders that publish lower minimum credit score requirements or offer programs that consider more than a single credit score cutoff.
- Loan selection: FHA, VA, USDA, and non-QM loans can give borrowers more ways to qualify when conventional financing is not a fit.
- Down payment requirements: A low minimum credit score is less useful if the required down payment makes the loan unrealistic.
- Underwriting options: Manual underwriting, alternative documentation, and non-QM programs can help borrowers whose finances do not fit standard automated guidelines.
- Borrower access: We considered online access, branch support, credit assistance, and how clearly each lender publishes its requirements.
What Credit Score Do You Need for a Mortgage in 2026?
There is no single minimum credit score for every mortgage. The loan program sets part of the framework, while the lender can add stricter requirements.
| Mortgage Type | General Credit Score Rule | Down Payment or Key Requirement |
| FHA loan | 500 to 579 can qualify under FHA rules; 580 or higher gets the lower down payment threshold | 10% down at 500 to 579; 3.5% down at 580 or higher |
| VA loan | The VA sets no minimum credit score | Eligible borrowers can qualify with no down payment, but lenders set their own credit rules |
| USDA loan | Lender requirements vary; some lenders in this guide publish minimum credit scores in the mid-500s | No down payment for eligible borrowers and properties |
| Fannie Mae conventional loan through Desktop Underwriter | No fixed minimum third-party credit score as of November 2025 | Desktop Underwriter evaluates broader credit risk, and lender rules still apply |
| Freddie Mac conventional loan | Many standard products still use a 620 minimum credit score unless a specific program says otherwise | Down payments can start at 3% for some programs |
The key point is simple: a loan program’s minimum is not always the lender’s minimum. A borrower with a 540 credit score may fit FHA rules but still get turned down by a lender that requires 580.
Credit scoring is also changing in 2026. Approved lenders can use either Classic FICO or VantageScore 4.0 for eligible loans sold to Fannie Mae and Freddie Mac during the current interim phase. FHA also permits VantageScore 4.0 and FICO 10T for FHA-insured mortgage underwriting. These changes do not remove lender credit score requirements, but they can change which credit scoring model a lender uses.
Why Mortgage Lender Credit Score Requirements Can Be Higher Than Program Minimums
Mortgage lenders can add their own requirements on top of FHA, VA, USDA, Fannie Mae, or Freddie Mac rules. These added rules are often called lender overlays.
An FHA loan shows why this matters. FHA rules allow a 500 credit score with at least 10% down, but PennyMac requires a 580 credit score for its FHA purchase loans. Rate accepts FHA borrowers down to a 500 credit score, while Guild publishes a 540 minimum credit score.
That is why borrowers with bad credit should compare lenders before they assume they cannot qualify. A denial from one lender does not prove that every lender will make the same decision.
How to Compare Mortgage Lenders When You Have Bad Credit
The lowest minimum credit score should get your attention, but it should not make the decision for you. Once you find lenders that may approve your credit profile, compare the actual cost and terms of each mortgage.
- APR: Compare annual percentage rates because APR includes the interest rate plus certain loan costs.
- Cash needed at closing: Compare the down payment, lender fees, discount points, mortgage insurance, and other closing costs.
- Monthly payment: Compare principal, interest, taxes, homeowners insurance, and mortgage insurance when it applies.
- Loan type: Ask whether FHA, VA, USDA, conventional, or non-QM financing gives you the best combination of approval odds and total cost.
- Loan Estimate: Request a Loan Estimate from multiple lenders after you apply so you can compare standardized costs side by side.
A lender that accepts a lower credit score can still be more expensive than another lender. Compare the full offer instead of choosing based on the approval threshold alone.
How to Improve Your Mortgage Approval Odds With Bad Credit
Mortgage approval depends on more than your credit score. A stronger application in other areas can help, especially when your credit score sits near a lender’s cutoff.
- Lower credit card balances: Lower revolving balances can reduce credit utilization and may improve your credit score after the new balances reach your credit report.
- Check your credit report for errors: Dispute inaccurate late payments, balances, accounts, or other information before you apply.
- Build cash reserves: Extra savings after closing can make the application stronger and protect you from an unexpected expense after you buy.
- Reduce monthly debt: A lower debt-to-income ratio gives the lender more room to approve the mortgage payment.
- Save a larger down payment: More money down can help when a loan program or lender allows lower credit scores with a lower loan-to-value ratio.
- Avoid new debt before closing: A new car loan, credit card, or other monthly payment can change your debt-to-income ratio and trigger another underwriting review.
If your biggest obstacle is the down payment rather than your credit score, review first-time homebuyer grants and programs before you decide how long to wait.
When It May Make Sense to Wait Before Applying
Applying now is not always the best financial move. A short delay can improve your choices if a specific problem is keeping you from qualifying or forcing you into much higher costs.
Consider waiting if your credit score is below the minimum for every realistic lender you have checked, your credit card balances are close to their limits, you recently missed housing payments, or you do not have enough cash for the required down payment and closing costs.
Recent bankruptcy or foreclosure also requires closer review. Waiting periods differ by loan program, type of bankruptcy, foreclosure history, and documented circumstances. Do not rely on a blanket 12-month or 24-month rule. Ask lenders which program you may qualify for and on what date.
Choose the Mortgage Lender That Fits Your Full Financial Profile
Bad credit can narrow your mortgage options, but the cutoff is not the same everywhere. Rate and Carrington publish options down to a 500 credit score, Guild goes down to 540 on several government-backed programs, and New American Funding also works within FHA’s 500 credit score framework.
Start with lenders whose published requirements fit your credit score and down payment. Then compare Loan Estimates, APRs, monthly payments, and cash needed at closing before you commit.
If you already own a home and your goal is to replace your current mortgage, see our guide to refinancing a mortgage with bad credit.
Frequently Asked Questions
Can I refinance my mortgage if I have bad credit?
Yes, but your options may be limited. Some lenders offer FHA Streamline or VA IRRRL refinance programs that don’t require a credit check. If you’re not eligible for those, you may need to improve your credit score or wait until you’ve built equity in your home to qualify for a better refinance rate.
See also: How to Refinance a Mortgage with Bad Credit
Does applying for multiple mortgages hurt my credit?
Not if you apply within a short window. Credit scoring models treat multiple mortgage inquiries made within a 14–45 day span as a single inquiry. This lets you shop around for the best rate without significantly hurting your credit score.
How long should I wait after improving my credit to apply for a mortgage?
It depends on how much your credit improves. Even a 20–30 point increase can open new loan options. Once your credit report updates and your score goes up, most lenders recommend waiting at least 30 days before applying so your score reflects the improvement.
Will a larger down payment make up for bad credit?
It can help. A bigger down payment lowers the lender’s risk, which can increase your chances of approval and possibly reduce your interest rate. But it won’t erase the impact of a low credit score entirely; both factors still matter.
Can I get a mortgage if I have no credit history?
It’s possible, but harder. Lenders may use alternative credit data like rental history, utility payments, or bank account activity to evaluate your application. Some loan programs, including certain FHA and non-QM loans, are more flexible when it comes to limited credit history.
