If you’ve got less-than-perfect credit and are looking to purchase a home or refinance your mortgage, there are low credit score mortgage lenders out there with options for you. Bankrate has made it easier to find lenders that provide home loans for borrowers with bad credit, based on criteria such as lowest minimum credit score requirement, widest array of loan programs for low-credit borrowers and down payment assistance. Here is our guide to the best mortgage lenders for low credit score borrowers in 2023.

Best mortgage lenders for low or bad credit borrowers

Cardinal Financial

Cardinal Financial mortgage review

Availability Available in all U.S. states
Loans offered Conventional, FHA, VA, USDA
Credit requirements 620 for conventional loans; 580 for VA loans
Down payment minimum 3% for conventional loans; none for VA loans
Where to find Online and in-person
  • Works with affordable housing, first-time homebuyer and down payment assistance programs nationwide
  • Offers specialized loan products

 

Cherry Creek Mortgage

Cherry Creek Mortgage review

Availability Available in 43 states; not available in Alaska, Hawaii, Massachusetts, New York, Rhode Island, Vermont, Virginia and Washington, D.C.
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements 620 for conventional loans; 700 for jumbo loans; 620 for FHA loans; 620 for VA loans; 640 for USDA loans
Down payment minimum 3% for conventional loans; 3.5% for FHA loans; none for USDA loans
Where to find Online and in-person
  • Wide range of loan programs, including low-down payment options
  • Helpful calculators to estimate homeownership costs
  • Regularly updated and published rates

eClick Lending

eClick Lending mortgage review

Availability Available in 49 U.S. states (not available in NY)
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 Online
  • Can close as fast as two weeks
  • No HELOCs or home equity loans

Garden State Home Loans

Garden State Home Loans Mortgage review

Availability Available in Connecticut, Delaware, Florida, Maryland, Michigan, New Jersey, New York, Pennsylvania and Virginia
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements 620 for conventional loans
Down payment minimum Undisclosed
Where to find Online
  • Convenient online chat feature to connect with loan officers
  • Closings on purchases can take as little as 20 days
  • A+ Better Business Bureau rating

Reliant Home Funding

Reliant Home Funding Mortgage review

Availability Available in Colorado, Connecticut, Delaware, Florida, Georgia, Maryland, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee and Vermont
Loans offered Conventional, FHA, VA, USDA
Credit requirements 620 for conventional loans; 500 for FHA loans; 700 for adjustable-rate mortgages; 620 for renovation loans
Down payment minimum 3% for conventional loans; 3.5% for FHA loans; none for VA loans
Where to find Online
  • Emphasis on customer service
  • Fully online lending process
  • Offers a variety of loan types

U.S. Bank

U.S. Bank Mortgage review

Availability Available in all U.S. states
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements 620 for conventional loans; 740 for jumbo loans
Down payment minimum Undisclosed
Where to find Online and in-person
  • Gives eligible existing customers a closing cost credit up to $1,000
  • Borrowers can apply online, in person or over the phone, depending on their preference

Valley Bank

Valley Bank Mortgage review

Availability Available in all U.S. states
Loans offered Conventional, jumbo, FHA, VA, USDA
Credit requirements Undisclosed
Down payment minimum 3.5% for FHA loans; none for VA loans
Where to find Online and in-person
  • Rates updated daily for easy comparison
  • Mobile app powers efficient digital experience
  • Low refinance fees

Wells Fargo

Wells Fargo mortgage review

Availability Available in all U.S. states
Loans offered Conventional, jumbo, VA, USDA
Credit requirements 620 for conventional and VA loans
Down payment minimum 3% for conventional loans; none for VA loans
Where to find Branch locations and online
  • Will consider non-traditional credit references in the application process
  • Offers low-down payment options to assist lower-income borrowers

Summary: Best mortgage lenders for low or bad-credit borrowers

Lender Credit requirements Down payment minimum Bankrate review
Cardinal Financial 620 for conventional loans; 580 for VA loans 3% for conventional loans; none for VA loans Cardinal Financial mortgage review
Cherry Creek Mortgage review 620 for conventional loans; 700 for jumbo loans; 620 for FHA loans; 620 for VA loans; 640 for USDA loans 3% for conventional loans; 3.5% for FHA loans; none for USDA loans Cherry Creek Mortgage review
eClick Lending 620 for conventional loans 3% for conventional loans; 3.5% for FHA loans; none for VA and USDA loans eClick Lending mortgage review
Garden State Home Loans 620 for conventional loans Undisclosed Garden State Home Loans Mortgage review
Reliant Home Funding 620 for conventional loans; 500 for FHA loans; 700 for adjustable-rate mortgages; 620 for renovation loans 3% for conventional loans; 3.5% for FHA loans; none for VA loans Reliant Home Funding Mortgage review
U.S. Bank 620 for conventional loans; 740 for jumbo loans Undisclosed U.S. Bank Mortgage review
Valley Bank Undisclosed 3.5% for FHA loans; none for VA loans Valley Bank Mortgage review
Wells Fargo 620 for conventional and VA loans 3% for conventional loans; none for VA loans Wells Fargo mortgage review

How a low credit score affects your mortgage

The lowest interest rates go to borrowers with the strongest credit scores. Borrowers with lower scores have higher rates, and potentially pay steeper financing costs, since they present more risk to the lender. If you have a lower score, you could spend several thousand more in interest over the life of your mortgage.

Assume you get a $350,000 30-year mortgage with a fixed 4.5 percent rate. Your monthly payment (for principal and interest only) would be $1,773, and you would pay $288,583 in interest over the 30-year loan term.

If you were able to improve your credit and secure a rate of 3.75 percent instead, your monthly payment would drop to $1,620, and you’d pay $233,800 in interest for the duration of the loan. That’s a cost savings of approximately $54,800. 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 credit-challenged borrowers.
  • Consider using a credit union or online lender, which might have more flexible loan options.
  • Look into government-backed loan programs, as they typically 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.

How to refinance a mortgage with bad credit

If you’re worried your credit score is too low to refinance your mortgage, consider these options:

  1. Wait, and work to improve your credit score to potentially qualify for a lower rate.
  2. Inquire about refinancing with your current lender, which might approve you off the strength of the relationship you’ve built with their institution.
  3. Consider an FHA rate-and-term or streamline refinance (or VA or USDA streamline refinance, if eligible).
  4. Explore portfolio lenders who offer refinancing, as they might have more flexibility.
  5. Get a co-signer with a strong credit history and a substantial amount of savings or other assets.

How to improve your credit score

It’s best to work toward a higher credit score before applying for a mortgage, even if you’ve had some serious dings in the past. You could increase your chances of getting approved and possibly qualify for a more competitive interest rate. Here are some tips:

  1. Review your three credit reports from the credit reporting bureaus for no charge at com. Contact the agency as soon as possible if you spot any errors or inaccuracies so you can resolve them quickly.
  2. Pay all of your bills on time and in full, if possible.
  3. 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.
  4. If your credit report is thin, ask a family member or friend to add you as an authorized user to their existing credit card. This can help build your credit history.
  5. Don’t apply for new credit too frequently, especially before applying for a mortgage and during the loan underwriting process.
  6. Enroll in the Experian Boost or UltraFICO program. These free programs take into account your bill payment history and your banking data, respectively, which can help improve your credit score.
  7. If you need more help, consider consulting with a credit counseling organization. Just be wary of debt settlers, who often give bad advice but pose as reputable credit counselors.

FAQs

  • It’s possible to qualify for a mortgage even if you have bad, low or poor credit. In fact, the U.S. Department of Housing and Urban Development (HUD) reports that the share of mortgages made to borrowers with a credit score of less than 620 has steadily grown in recent years.

    You can also improve your chances of getting approved for a mortgage if you apply with a co-borrower or co-signer who has good credit. Note that a co-borrower has ownership of the property, but a co-signer doesn’t, so the latter might be the better option if you’re just looking to give your credit profile a boost.
  • The types of mortgages worth considering if you have poor credit include:

    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.

  • The lowest credit score you need 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, VA and USDA loans have lower minimum credit score requirements than conventional loans, and might make more sense for you if your credit needs improvement.

Methodology

To determine the best mortgage lenders for low or bad credit borrowers, Bankrate evaluated lenders based on several criteria, including affordability (APR, discounts and/or incentives); availability (approval/closing timelines, loan products); and experience (application process, customer service).