14 Best Home Loans for Low or Bad Credit Scores of April 2025
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Yes, you can still get a mortgage if your credit score is below 620. Expect some tradeoffs: You’ll probably need a larger down payment or pay higher interest and fees.
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Why trust NerdWallet
- 50+ mortgage lenders reviewed and rated by our team of experts.
- 40+ years of combined experience covering mortgages and financial topics.
- Objective, comprehensive star rating system assessing 120+ categories and 5,000+ data points.
- Governed by NerdWallet's strict guidelines for editorial integrity.
14 Best Home Loans for Low or Bad Credit Scores of April 2025
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Lender ▾ ▾ | NerdWallet Rating ▾ ▾ | Min. credit score ▾ ▾ | Min. down payment ▾ ▾ | Learn more |
|---|---|---|---|---|
 New American Funding: NMLS#6606 Top 3 most visited 🏆 Learn more at New American Funding | 500 | 3.5% | Top 3 most visited 🏆 Learn more at New American Funding | |
580 | 3.5% | |||
 Wells Fargo: NMLS#399801 Compare More Lenders on NerdWallet | 600 | 0% | Compare More Lenders on NerdWallet | |
N/A | 3.5% | Learn more at First Federal Bank | ||
 Newrez: NMLS#3013 Compare More Lenders on NerdWallet | 580 | 3% | Compare More Lenders on NerdWallet | |
 Guild Mortgage: NMLS#3274 Compare More Lenders on NerdWallet | 540 | 3.5% | Compare More Lenders on NerdWallet | |
 State Employees' Credit Union: NMLS#430055 Compare More Lenders on NerdWallet | N/A | 0% | Compare More Lenders on NerdWallet | |
 loanDepot: NMLS#174457 Compare More Lenders on NerdWallet | 520 | 3.5% | Compare More Lenders on NerdWallet | |
 PrimeLending: NMLS#13649 Compare More Lenders on NerdWallet | 580 | 3.5% | Compare More Lenders on NerdWallet | |
 CrossCountry Mortgage: NMLS#3029 Compare More Lenders on NerdWallet | 500 | 3.5% | Compare More Lenders on NerdWallet | |
 AmeriSave: NMLS#1168 Compare More Lenders on NerdWallet | 580 | 3.5% | Compare More Lenders on NerdWallet | |
 Flagstar: NMLS#417490 Compare More Lenders on NerdWallet | 580 | 3.5% | Compare More Lenders on NerdWallet | |
 Network Capital: NMLS#11712 Compare More Lenders on NerdWallet | 540 | 3.5% | Compare More Lenders on NerdWallet | |
 Carrington: NMLS#2600 Compare More Lenders on NerdWallet | 500 | 3.5% | Compare More Lenders on NerdWallet |
New American Funding: NMLS#6606
500
3.5%
- Why We Like ItNew American Funding offers a large menu of loan products, including FHA 203(k) loans, as well as programs like first-time home buyer assistance.Pros
- Offers a wide variety of purchase and refinance mortgages.
- Has unique buyer assistance programs.
Cons- Average origination fees are on the high side, according to the latest federal data.
- Personalized mortgage rates are not available on the website without providing contact information.
- Why We Like ItRate boasts a streamlined application process, with full underwriting in as little as one business day.Pros
- Fully underwritten mortgage approval in as little as one day for qualified borrowers.
- Generous selection of mortgages, including renovation loans.
Cons- Doesn't offer customer service chat with a live agent.
- Why We Like ItWells Fargo offers low interest rates compared to other VA lenders.Pros
- Interest rates are on the lower end compared to other VA lenders.
- Offers VA Interest Rate Reduction Refinance loans (VA IRRRL).
- Sample interest rates are posted online.
Cons- Does not offer VA cash-out refinancing.
- Does not offer VA renovation loans.
First Federal Bank: NMLS#408902
N/A
3.5%
- Why We Like ItFirst Federal Bank Mortgage Lenders, an online-only lender, stands out for its focus on government loan lending and low average mortgage rates.Pros
- Almost a quarter of all loans last year were FHA loans.
- Average mortgage rates are on the lower side, according to the latest federal data.
- Offers 15-, 20-, 25-, and 30-year repayment terms, which is unusually flexible.
Cons- No dedicated mobile app for mortgage borrowers.
- Some loans are geographically limited.
Newrez: NMLS#3013
580
3%
National
- Why We Like ItNewRez appeals to borrowers who need flexible guidelines to qualify for a mortgage, like alternative income documentation or a higher debt-to-income ratio.Pros
- Accepts history of bad credit, foreclosure or bankruptcy.
- Flexible options for self-employed borrowers.
- Originated an above-average amount of FHA loans, according to the latest federal data.
Cons- Doesn’t post mortgage rates online.
- Online chat not available for customer service.
- No construction or renovation loans.
- Why We Like ItGuild offers flexibility for borrowers with nontraditional credit. Down payment assistance is generous, especially for low-income borrowers in underserved communities.Pros
- Offers several programs to make homeownership more accessible.
- Offers loans for manufactured homes.
- Renovation loan options are available.
Cons- Does not publish interest rates online.
- No mortgage mobile app.
- Loans are not available in every state.
State Employees' Credit Union: NMLS#430055
N/A
0%
- Why We Like ItState Employee's Credit Union in North Carolina has some of the lowest average mortgage rates of lenders we review, as well as generous grants and specialty loans for first time home buyers who meet its membership criteria.Pros
- Offers a no-down-payment mortgage without private mortgage insurance.
- Participates in multiple first-time buyer assistance programs.
- Very low average mortgage rates, according to the latest federal data.
Cons- Credit union membership eligibility is limited.
- Loans only available in five states.
- Doesn’t offer government-backed mortgages.
- Why We Like ItWorking with LoanDepot partners offers the potential for a streamlined mortgage process and cash back, and the lender offers a wide variety of FHA loan types.Pros
- Offers a variety of repayment terms for fixed-rate loans.
- Does a substantial amount of business in FHA lending.
- mello smartloan product can streamline mortgage application, appraisal and title search.
Cons- Interest rates are not available on the website.
- Can't apply for a mortgage on the lender's mobile app.
- Why We Like ItPrimeLending is experienced in financing for fixer-uppers, including 203(k) renovation mortgages, and lends a high volume of FHA loans.Pros
- Offers closing cost assistance.
- Wide variety of loan types, including renovation, refinance and energy-efficient FHA loans.
- Lends a high volume of government-backed loans."
Cons- Loans are not available in all states.
- Rates are not posted online.
- Does not have a mobile app.
CrossCountry Mortgage: NMLS#3029
500
3.5%
- Why We Like ItCrossCountry Mortgage has a solid variety of FHA loans, as well as impressive down payment assistance programs for first-time buyers.Pros
- Average time to close is 21 days, which is faster than the industry standard.
- Qualified borrowers can receive up to $6,500 in down payment assistance.
- High market share of FHA loans.
Cons- Doesn’t post rates online.
- No mobile app.
- Why We Like ItAmeriSave’s rate-buydown program, online tools, customer service and comparably low rates will appeal to first-time buyers.Pros
- A temporary buydown program lowers buyers’ interest rates in their first year.
- Offers low rates compared with other lenders, according to the latest federal data.
Cons- Average origination fees are on the high side compared to other lenders, according to the latest federal data.
- Mortgage rates are not published online.
- Doesn’t originate mortgages in the state of New York.
- Why We Like ItFlagstar Bank, recently acquired by Mr. Cooper, stands out for its range of accessible loans and programs, including no-down-payment loans, localized loans with flexible requirements and a number of down payment grant options.Pros
- Reported average time to close (20-30 days) is faster than industry standard.
- Offers down payment assistance to first-time home buyers.
Cons- The lender’s mobile app is focused on banking, not mortgages.
- Some loans and programs are restricted by area.
- Why We Like ItNetwork Capital offers a solid variety of FHA loans, including refinance and energy-efficient mortgages, and a low minimum credit score requirement.Pros
- Reported average time to close is 20 days, far below the industry average.
- Offers FHA energy-efficient mortgages.
- Also offers non-QM loans and ITIN loans, which have flexible qualifying guidelines.
Cons- The lender’s website offers limited loan details.
- Why We Like ItCarrington Mortgage dedicates a large portion of its business to FHA loans and is experienced working with self-employed borrowers and those with heavy debt.Pros
- Considers borrowers with bad credit, foreclosure or bankruptcy.
- Accepts self-employed borrowers.
- FHA interest rates are on the low side, according to the latest federal data.
Cons- FHA origination fees are on the high side, according to the latest federal data.
- Doesn’t post interest rates online.
- No online chat for customer service.
NOTE: The credit scores in this list represent the most recent information provided to NerdWallet. They are subject to change, and your approval will be based on a variety of factors. To see a lender's credit score minimums for other loan types, tap the "?" in the credit score column.
Bad credit home loans: Common options
Conventional loans are the most popular type of mortgage, but they typically require a credit score of at least 620.
Common choices include these government-backed loans for bad credit:
Type of loan | Backed by | Focus | Minimum down payment |
|---|---|---|---|
Federal Housing Administration | All home buyers | 3.5% (with a credit score 580+) 10% (with a credit score 500-579) | |
Department of Veterans Affairs | Active military and veterans | 0% | |
U.S. Department of Agriculture | Mostly rural areas | 0% |
How to get a mortgage with a low or bad credit score
When you apply for a mortgage, here are the four main things lenders look at:
Your credit score.
Your debt load compared to what you earn, called your debt-to-income ratio or DTI.
Your job history.
The size of your down payment.
If you are weak in one area, a strong point in another might help. Here’s how you can improve your chances of getting approved.
Nerdy Tip
Want personalized advice? Find a housing counselor through the U.S. Department of Housing and Urban Development (HUD) for free or low-cost help. They can help you make a plan to build your credit and buy a house.
1. Credit score
Where to start: Before you buy a house, find out your credit score — and how to build it. Need ideas? See our guide to real ways to raise your credit fast.
Your credit score affects which home loans you can get, your interest rate and how much money you need to pay upfront.
You may be able to qualify for a mortgage with a credit score that's as low as 500. However, you might have to make a larger down payment and pay a higher interest rate.
It takes time to bump your credit, but a higher score can help you start off your home loan on better terms. That saves you money in the long run.
2. Debt-to-income ratio
Where to start: Review your current bills and loans. Then, pay down what you can. See our tips to pay off debt before you take on a big loan like a mortgage.
To figure out your debt-to-income ratio, or DTI, a lender will divide your total monthly bills (like car payments or student loans) by your monthly pre-tax income.
Most lenders will look for a DTI that's 36% or lower (including your housing costs). A lender that allows a higher DTI probably charges higher interest rates.
You can lower your DTI by paying down existing debts. While you're getting ready to buy a house, avoid taking on any more debt or making big purchases.
3. Employment history
Where to start: Avoid making any job changes until after you close on a house. The steadier, the better.
You can't change your work history, but you can do your best to make sure you have a steady job before you apply for a mortgage. (To get a self-employed mortgage, expect to do a little more paperwork.) If you change jobs or get laid off during the mortgage underwriting process, it can be harder to get the loan approved.
4. Down payment
Where to start: Put down as much as you can comfortably afford. To a lender, a larger down payment can offset a lower credit score.
The minimum down payment to buy a house depends on what type of home loan you're getting. You don’t need 20% down to buy a house, but a higher amount will generally get you a better interest rate.
Keep some cash in your emergency savings, but try to put down as much as you can comfortably afford. How much is enough? Read our guide on how much down payment you need for a house.
State-sponsored first-time home buyer programs offer down payment assistance and grants that can give your savings a boost.
The bottom line? Shop around. You may qualify for a home loan with some lenders but not others, and you'll want to compare the different offers. Look closely at the rates and fees to see which mortgage lender is offering you the best deal.
More from NerdWallet:
Last updated on March 5, 2025
Frequently asked questions
A 500 is the absolute lowest credit score needed to buy a house. On paper, that score enables you to qualify for a loan backed by the Federal Housing Administration with a 10% down payment. In reality, however, few lenders will accept a score that low. Bringing up your credit score can give you more loan options, get you a lower interest rate and allow you to make a smaller down payment.
Mortgage lenders' requirements for borrowers vary, but if you have bad credit you should look for lenders that are willing to consider alternative credit data. That means they will review aspects of your financial situation, like on-time rent and utility payments, that aren’t normally reported to the credit bureaus. You'll have to provide the lender with documentation of this info.
Yes. Having a stable employment history and saving up a larger down payment can help offset a weaker credit score. Some kinds of mortgages, like FHA loans, have lower minimum credit score requirements. That said, if you can build your credit first, it will help you not only get a mortgage but also get a better interest rate. That can potentially save you thousands of dollars.
The easiest mortgage to qualify for depends on you. While FHA loans are known for allowing lower minimum credit scores, a VA loan or a USDA loan may be easier to qualify for if you fit their requirements. For a VA loan you need to be an active or retired member of the military or a military spouse. USDA loans have income and location requirements.
Methodology
The star ratings on this page reflect each lender's rating for FHA products (read more about how we determine FHA ratings), conventional loans (read more about how we determine conventional loan ratings), or VA products (read more about how we determine VA ratings). The lenders on this page are chosen using this methodology:
NerdWallet reviewed more than 40 mortgage lenders, including the majority of the largest U.S. mortgage lenders by annual loan volume (lenders had to have at least a 1% market share), lenders with significant online search volume and those that specialize in serving various audiences across the country.
For inclusion in this roundup, lenders need to share credit score requirements with NerdWallet and offer at least one loan product where the stated credit score minimum is 600 or lower. Additionally, the lender must offer at least one product or feature that accommodates borrowers with lower credit scores. This product or feature needs to be in addition to or separate from offering government-backed loans.
NerdWallet solicits information from reviewed lenders on a recurring basis throughout the year. All lender-provided information is verified through lender websites and interviews. We also utilized 2023 Home Mortgage Disclosure Act data for origination volume, origination fee, average interest rate and share-of-product data.
NerdWallet's Best Home Loans for Low or Bad Credit Scores of April 2025
- New American Funding: Best for FHA loans
- Rate: Best for fast preapproval
- Wells Fargo: Best for VA loans
- First Federal Bank: Best for traditional lending experience
- Newrez: Best for conventional loans
- Guild Mortgage: Best for borrowers with nontraditional credit
- State Employees' Credit Union: Best for credit union experience
- loanDepot: Best for variety of loan types
- PrimeLending: Best for fixer-uppers
- CrossCountry Mortgage: Best for down payment assistance
- AmeriSave: Best for FHA loans
- Flagstar: Best for low or bad credit scores overall
- Network Capital: Best for niche loans with flexible qualification
- Carrington: Best for history of bankruptcy
