Best Home Loans for Bad Credit
FHA loans and VA loans are typically the best bad credit home loans because they have lower credit score qualification requirements and are reasonable options for many borrowers.
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It’s very possible to get a mortgage even if you have bad credit. We’ll cover the best bad credit lenders and loan programs available to you.
Below, we cover how a weak credit score (579 or lower) will influence the types of loans you qualify for, your interest rate and the steps you may need to take before buying a home.
We’ll also help you decide whether you should get a bad credit home loan now or wait to improve your score.
Best bad credit mortgage lenders
Many lenders are willing to take a chance on borrowers with credit blemishes. Bad credit likely won’t outright prevent you from getting a home loan.
| Lender | Best for | Min. credit score | Min. down payment | User ratings | |
|---|---|---|---|---|---|
 | Overall bad credit FHA and VA loans | 500 | 3.5% |
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Ratings and reviews are from real consumers who have used the lending partner’s services.
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 | Runner up for best FHA loans with bad credit | 540 | 3.5% | User reviews coming soon | |
 | Alternate option for bad credit FHA loans | 550 | 3.5% |
(737)
Ratings and reviews are from real consumers who have used the lending partner’s services.
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 | VA loan online experience and bad credit runner-up | 580 | 0% for borrowers with full entitlement |
(645)
Ratings and reviews are from real consumers who have used the lending partner’s services.
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 | Overall VA loans and alternate bad credit option | 580 | 0% for borrowers with full entitlement |
(2624)
Ratings and reviews are from real consumers who have used the lending partner’s services.
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 | Alternate option for bad credit VA loans | 580 | 0% for borrowers with full entitlement | User reviews coming soon |
Your credit score is important to lenders, but it isn’t the be-all, end-all. Lenders view your score in the context of your specific circumstances. In fact, conventional loan guidelines no longer use a strict 620 credit score minimum as of late 2025 (though many lenders still do). And government-backed mortgages don’t set a hard credit minimum either.
Find the best. Read LendingTree’s lists of the best mortgage lenders.
Best overall bad credit FHA and VA lender: Carrington Mortgage
LendingTree chose Carrington Mortgage Services as the best FHA lender for bad credit loans because they offer FHA home loans to borrowers with the lowest allowable credit scores: 500.
That’s lower than some other FHA lenders we reviewed, though it isn’t totally unique. Still, it shows that Carrington specializes in helping borrowers who could be left behind by more traditional lenders. And they also offer flexible loan options tailored to borrowers with low or damaged credit, income documentation issues, or other financial issues that can stop them from qualifying for traditional home loans.
If you’re looking for a lender that’s willing to take a chance on borrowers with low credit scores or other blemishes in their financial profile, Carrington could be a great choice for you.
Carrington Mortgage Services is based in California and services loans in all 50 states, with licenses to lend in 49 states.
Read LendingTree’s Carrington review for more details.
You’ll have the best chance of qualifying for a home loan with Carrington Mortgage Services if you have:
- LTV ratio of 75% or better
- DTI ratio below 43%
Carrington doesn’t share the exact minimum requirements it uses to approve applications, but most customers met these qualifications, according to nationwide data from 2024.
Runner up for best FHA loans with bad credit: Guild Mortgage
Guild Mortgage offers a wide range of mortgage options, including conventional and government-backed loans.
It stands out for its personalized service and its accessibility to borrowers with no or low credit scores and unique financial situations, offering diverse choices tailored to various needs.
Guild Mortgage lends to 49 states (excluding New York) and Washington, D.C.
Read LendingTree’s Guild Mortgage review for more details.
Guild Mortgage seems to be more flexible with its lending criteria than many other lenders, so even borrowers with the following still have a good chance of qualifying (according to 2024 data):
- LTV ratio above 85% (most lenders look for an LTV below 75%)
- DTI ratio above 40% (most lenders require a max of 43%)
Alternate option for bad credit FHA loans: Sebonic Financial
Sebonic Financial has several government-backed mortgage options with low credit score and down payment requirements. This offers many borrowers that are more likely to be rejected by other lenders an option to qualify for a home loan.
Sebonic Financial, a subsidiary of the Cardinal Financial Company, is licensed to issue home loans in all 50 states.
Read LendingTree’s Sebonic review for more details.
Sebonic Financial has a lower mortgage rejection rate than other lenders because it has several mortgage programs for those with lower credit scores or incomes.
This means it should not be very difficult to qualify for an FHA loan from Sebonic, but there are ways you can improve your odds:
- Offer a down payment of 9% or higher (the average for approved applicants at Sebonic)
- Lower your debt-to-income ratio (DTI) below 43% (most rejected applicants had a DTI higher than this)
Use LendingTree’s DTI calculator to estimate your current DTI ratio today.
See LendingTree’s full list of the best FHA lenders.
Best online experience and bad credit VA loan runner-up: Flagstar
Flagstar may offer VA home loans for borrowers with little or no credit history. Those with low- and no-down-payment loans backed by the U.S. Department of Veterans Affairs are also eligible, including a VA 30-year fixed-rate mortgage and a VA adjustable-rate mortgage.
Flagstar also has an expansive online experience. They publish rates online, offer helpful product information and resources about mortgage lending on its website and have a convenient online application.
With nationwide reach, Flagstar issues home loans in all 50 states, offering both VA purchase loans and VA streamline refinances (IRRRLs).
Read LendingTree’s Flagstar Bank review to help decide whether this lender is right for you.
To get a VA loan, you must be an active-duty military member, eligible veteran or surviving spouse.
You’ll have the best chance of qualifying for a home loan with Flagstar Bank if you have a DTI ratio below 40%, according to Home Mortgage Disclosure Act (HMDA) data published in 2025.
Use LendingTree’s DTI calculator to estimate your current DTI ratio today.
Best overall VA lender and alternate bad credit option: Rocket Mortgage
Rocket Mortgage provides loan options for borrowers with lower credit scores and those looking for low-down-payment options or other specialty loan programs. They also offer all of the essential VA programs: purchase, cash-out refinance and streamline refinance, also known as an interest rate reduction refinance loan (IRRRL).
Military borrowers can also find a robust online loan experience through Rocket Mortgage, with an online application, rate information that’s updated regularly, detailed loan product information and resources to help you navigate the complex world of mortgage lending.
Rocket Mortgage services home loans in all 50 states and Washington, D.C.
Read LendingTree’s Rocket Mortgage review to help decide whether this lender is right for you.
To get a VA loan, you must be an active-duty military member, eligible veteran or surviving spouse.
You’ll have the best chance of qualifying for a home loan with Rocket Mortgage if you have an LTV ratio of 70% or lower, according to Home Mortgage Disclosure Act (HMDA) data published in 2025.
Alternate option for bad credit VA loans: Mr. Cooper
Mr. Cooper — which is now powered by Rocket Mortgage — is a digital mortgage provider offering multiple VA loan products available, including 15-year, 30-year, fixed-rate jumbo and adjustable-rate mortgages.
It’s a good solution for borrowers looking for homebuyer programs with low optional down payments, as well as for those who want quick prequalification or loan approval.
Mr. Cooper services digital home loans in all 50 states of the U.S.
Read LendingTree’s Mr. Cooper review to help decide whether this lender is right for you.
To get a VA loan, you must be an active-duty military member, eligible veteran or surviving spouse.
To increase your odds of being approved for a Mr. Cooper home loan, take the following steps:
- Lower your DTI ratio, eliminating or reducing debt before you apply for a loan.
- Build good credit habits, including making on-time payments, to boost your credit score.
- Keep your LTV below 59% (the average for approved Mr. Cooper applications).
See LendingTree’s full list of the best VA lenders.
Best home loans for bad credit: Compare 5 programs and their requirements
| Loan program | Minimum credit score | Possible to qualify without traditional credit? | Minimum down payment | Maximum DTI ratio* | |
|---|---|---|---|---|---|
| FHA loans | 500 | 3.5% with a 580 credit score or higher 10% with a 500 to 579 credit score | 43% | ||
| VA loans | None, but many VA loan lenders set a minimum in the range of 500 to 620 | 0% for borrowers with full entitlement | No set maximum, but many lenders look for a ratio no higher than 41% | ||
| USDA loans | None, but many lenders look for 640 | 0% | 41% to 44% | ||
| Conventional: Fannie Mae HomeReady® loans | None, but lenders traditionally look for 620 | 3% | 45% | ||
| Conventional: Freddie Mac Home Possible® loans | None, but lenders traditionally look for 660 | 3% | 36% to 45% |
| Credit score range | Borrower classification | What to expect |
|---|---|---|
| 780 and above | Optimal | The lowest possible closing costs and interest rates |
| 740 and above | Superprime | The lowest possible interest rates |
| 720 and above | Superprime | Good odds of being approved for most loans |
| 680 and above | Prime | Good odds of being approved for most loans |
| 620 to 679 | Nonprime | Less likely to be approved for a loan and may see higher interest rates and lower loan amounts |
| 540 to 619 | Subprime | May struggle to get approved for a loan |
| 539 and below | Deep subprime | May struggle to get approved for a loan |
Learn more about how to improve your credit score.
How to get a home loan with bad credit: 8 steps
Here are eight steps you can take to increase your odds of landing a mortgage preapproval when you have a low credit score:
1. Understand what’s on your credit reports
Inaccurate information can sometimes show up on your credit reports. Take the initiative to request a copy of your credit reports from the three main credit bureaus at AnnualCreditReport.com and review them for errors before looking into bad credit home loans.
2. Remove errors and paid-off debts from your credit report
If you spot any incorrect information on your credit report, you can follow these procedures to submit disputes and get the errors removed.
If you’ve had payments sent to collections in the past, they may still be on your report as well — even if you’ve paid them off.
In some cases, you can request that the lender remove the entry from your credit report, or offer to pay a still-outstanding debt in return for having it immediately removed. Your creditor doesn’t have to agree, but sometimes it will.
3. Increase your down payment
Putting more money down can go a long way toward getting a mortgage approval, as it helps demonstrate to lenders that you’re a less risky borrower.
In the case of FHA loans, a higher down payment means you can qualify with a 500 credit score. Increasing your down payment can also improve your mortgage rate and lower your closing costs.
Crafting a budget to find ways to cut expenses or picking up a side hustle to generate more income can help you save for a larger down payment. You should also consider committing any lump sums you receive, like tax refunds or bonuses, toward your down payment.
Finally, if you have loved ones who may be willing and able to help, you can always ask them to gift money toward your home purchase.
4. Pay down debt and lower your DTI ratio
One factor lenders consider when deciding whether to approve you for a loan is your debt-to-income (DTI) ratio. Your DTI ratio is calculated by dividing your total debt, including your mortgage payment, by your gross monthly income. Ideally, when you’re buying a house with bad credit, you’ll want to shoot for a ratio that’s no greater than 36%. DTI requirements do vary by loan and lender, however, and often sit in the 41% to 50% range.
Strategies to lower your DTI ratio include paying down some of your debts, increasing your income or getting a mortgage cosigner.
5. Focus on a track record of on-time payments
Your payment history accounts for 35% of your FICO Score. As such, maintaining a flawless payment history is one of the best ways to improve your credit score and increase your chances of getting a home loan with bad credit.
If you have a pattern of making late payments, you may want to wait before applying for a mortgage to minimize the impact on your loan terms.
6. Shop around for lenders
Use LendingTree to compare options from multiple lenders and compare rates and terms when shopping for a mortgage.
When searching for bad credit mortgage lenders, keep in mind that borrower requirements and rates will vary between types of lenders. For example, a local credit union may have more forgiving terms than a national bank, while an online lender may have a proprietary loan program you could qualify for.
Get real rates today by filling out LendingTree’s form below.
7. Find a cosigner or co-borrower
Not all loan programs allow it, but, in some cases, you can use a cosigner or co-borrower to boost your income — this can have a major effect on your DTI ratio and the loan amount you qualify to borrow. FHA loans, for example, usually require that borrowers live in the home they purchase, but will allow you to use the income of an out-of-state co-borrower or cosigner to qualify for a mortgage — even though they won’t be living in the home with you.
8. Seek a lower loan amount
One way to make qualification easier is simply to aim a little lower on your preferred loan amount.
One popular option, especially in nonurban areas, is a manufactured home. Modern manufactured homes can look surprisingly similar to site-built homes and cost around $79 less per square foot, compared to a typical site-built home.
Learn more about buying a manufactured home.
Should you get a bad credit home loan or wait?
Depending on your circumstances, waiting and improving your credit score instead of buying a house with bad credit could result in significant savings.
When you’re buying a home with bad credit, you’re seen as a bigger risk in the eyes of lenders. To offset that risk, lenders typically charge a higher interest rate than they would charge someone with excellent credit.
The differences between credit score ranges can translate to tens of thousands of dollars in extra interest charges over the life of the loan.
Example scenario: How a low credit score can affect your interest
Here’s an example of how a low credit score can impact the interest rate and total interest paid on a $350,000, 30-year fixed-rate mortgage.
| Credit score | APR | Monthly payment (principal and interest only) | Total interest paid | Monthly savings over next lowest credit tier | Total interest savings over next lowest credit tier |
|---|---|---|---|---|---|
| 760-850 | 6.378% | $2,184 | $436,323 | $59 | $21,301 |
| 700-759 | 6.635% | $2,243 | $457,624 | $34 | $12,208 |
| 680-699 | 6.781% | $2,277 | $469,832 | $15 | $5,122 |
| 660-679 | 6.781% | $2,292 | $474,954 | $29 | $10,707 |
| 640-659 | 6.842% | $2,321 | $485,661 | $37 | $13,395 |
| 620-639 | 7.127% | $2,358 | $499,056 | $0 | $0 |
Use LendingTree’s mortgage calculator to estimate your monthly payment.
Frequently asked questions
Applying for a government-backed loan program is typically the easiest way to qualify for a mortgage with low credit. FHA and VA loans in particular come with forgiving credit minimums, shorter wait times after bankruptcy or foreclosure and competitive interest rates.
Yes, in fact you can qualify for any of the loans in our list of the five best home loans for bad credit with a 500 credit score. However, of those loan options, you will have the easiest time qualifying for an FHA or VA loan with a 500 score. These loans can come with some drawbacks — typically higher interest rates or higher APRs (or both). Plus, in the case of an FHA loan, you’ll have to make at least a 10% down payment if you have a credit score between 500 and 579.
You might pay more, but only indirectly. There won’t be an extra line item added to penalize borrowers with bad credit but, in some cases, your costs may be higher if you have bad credit. For example, if you’re paying a steeper interest rate because your credit score is low, your prepaid interest charge may come out to more than it would have for someone paying a lower interest rate.
You should also keep in mind that your closing costs will depend on your loan type, the home’s purchase price and other factors. For example, VA loan borrowers pay a funding fee, while FHA loan borrowers pay an upfront mortgage insurance premium.
Buying a house with bad credit doesn’t automatically mean you’ll pay higher mortgage insurance premiums. Your loan type and down payment will largely determine how expensive your mortgage insurance will be. For example, all FHA loans come with two types of mortgage insurance premiums, which are based on your loan amount, LTV ratio and location — your credit score doesn’t play into that calculation.
Conventional loan borrowers who put down less than 20% will pay a similar fee, called private mortgage insurance (PMI). However, in this case, your credit score is a factor in determining how expensive it will be.
Having a cosigner on a home loan is possible, but asking someone to be a cosigner is a decision that shouldn’t be taken lightly. This person will be on the hook for your loan if you miss payments, which puts their creditworthiness at risk.
Yes, you can refinance a bad credit mortgage, but whether it’s worth it depends on your specific loan terms. If your credit has improved since buying a home with bad credit, and interest rates haven’t gone up significantly in that time, you may qualify for a lower rate or a mortgage with better loan terms. Keep in mind that you’ll have refinance closing costs, too, which will add to the cost of getting into that new mortgage.
Yes, you can get a mortgage after filing for bankruptcy. However, you’ll first need to go through a waiting period — this can range from one to four years, depending on the loan program and type of bankruptcy you filed.
If you’ve had a mortgage foreclosure, you’ll have to wait longer than you would after any other credit issue. Foreclosure waiting periods range from two to seven years. If, however, extenuating circumstances led to the foreclosure, such as an illness or job loss affecting the household’s breadwinner, there might be exceptions allowing you to get a loan sooner.