Bad Credit Mortgage Lenders | The Best Lenders of 2025

Yes, you can get a mortgage with bad credit

You don’t need perfect credit to qualify for a mortgage loan. In fact, some of the best mortgage lenders for bad credit regularly work with borrowers with FICO scores between 500 and 600.

Your mortgage rate may be higher than someone with excellent credit, but that doesn’t mean you’re out of options. You can still compare lenders, check terms, and find the right bad-credit home loan for you. Here's where to start.

In this article (Skip to...)

• Bad credit mortgage lenders
• Bad credit definition
• Bad credit and rates
• Bad credit mortgage loans
• FAQ
• Methodology

Getting a mortgage with bad credit isn’t easy, but some lenders specialize in making it possible.

We analyzed average interest rates* to find the top 10 bad credit mortgage lenders in 2025. While these mortgage providers may offer low-credit home loans, building better credit over time can help you qualify for lower interest rates down the road.

*From our list of the top 10 lenders for 2025, these are providers best suited for poor-credit borrowers due to their minimum credit score requirements.

Best mortgage lenders for bad credit at a glance

Top bad credit mortgage lenders for 2025

We analyzed loan-level data filed last year under the Home Mortgage Disclosure Act (HMDA) to find the best mortgage lenders for bad credit. In 2025, with mortgage rates not showing signs of declining just yet, lenders may adjust their credit score requirements to manage risk.

For context, today’s average 30-year fixed rate sits at % (% APR) for conventional loans and % (% APR) for FHA loans. These figures can give you a clearer picture of where you stand as you compare lenders, loan programs, and eligibility requirements.

1. Guild Mortgage

Guild Mortgage is among the best FHA lenders for bad credit. They accept credit scores as low as 540 if you can put 10% down. If your score is 580 or higher, that down payment drops to 3.5%. To help cover upfront costs, Guild offers a Zero Down program that combines an FHA mortgage loan with a second loan to cover another 3.5% to 5% of the purchase price.

There’s also a 1% Down Payment Advantage program, which gives qualified buyers a 2% grant to pair with just 1% down. If you meet certain income limits, you may qualify for conventional loans like HomeReady and Home Possible, which allow 3% down payments and more flexible credit histories. Beyond that, Guild connects buyers to over 700 down payment assistance programs, including 3-2-1 Home Plus and MyPath2Own, combining financial help with homebuyer education.

2. Lennar Mortgage

Lennar Mortgage ranks among the best mortgage companies for bad credit, offering flexible loan programs and competitive mortgage rates for buyers with poor credit or limited credit history. They accept FHA loan applicants with a minimum credit score of 580 and just a 3.5% down payment, with the option to use gift funds or local assistance programs to help cover upfront costs.

Lennar also works with conventional loan programs like HomeReady and Home Possible, which are designed for low- to moderate-income borrowers and allow 3% down payments, reduced mortgage insurance, and flexible income rules. In addition to national options, Lennar connects qualified buyers to grants, forgivable loans, and other down payment assistance.

3. Sage Mortgage

Sage Home Loans is one of the top mortgage lenders that work with bad credit, mainly due to its competitive interest rates for home buyers with low credit scores or limited credit history. You can qualify for an FHA loan with a 580 credit score and a 3.5% down payment or go as low as 500 if you can put 10% down. They also offer conventional loans like HomeReady and Home Possible that qualify low- to moderate-income borrowers with as little as 3% down. These programs accept alternative income sources useful for the self-employed or anyone with non-traditional finances. They also come with reduced mortgage insurance, which lowers your monthly mortgage payment. For buyers working through poor credit, Sage Mortgage offers a flexible path to homeownership, focusing on practical, accessible home loans for bad credit.

4. PennyMac

PennyMac is another standout among mortgage companies that work with bad credit. They accept FHA loan applications with credit scores as low as 580 and a 3.5% down payment. PennyMac also offers conventional loans tailored for low- to moderate-income borrowers. These allow 3% down payments, consider alternative income sources, and include reduced mortgage insurance. 

If you qualify, PennyMac provides down payment assistance, including a temporary $2,500 credit for very low-income buyers or $1,250 from the BorrowSmart program to apply toward closing costs or your down payment. With flexible credit score requirements and various home loan options for those with bad credit, PennyMac offers buyers with poor credit pathways to homeownership.

5. Benchmark Mortgage

Finding mortgage loans for bad credit isn’t easy, but Benchmark Mortgage helps make it possible. It works with borrowers with credit scores as low as 580, offering FHA loans with just 3.5% down. Even applicants between 500 and 579 scores may qualify by putting 10% down. For buyers with limited savings, Benchmark also offers conventional loans starting at 3% down, along with USDA loans that require no down payment for those buying in eligible rural areas.

To help lower upfront costs, Benchmark Mortgage connects buyers to down payment assistance programs, including options for first-time home buyers, repeat buyers, and even public servants. With this mix of low-credit home loans, relaxed credit score requirements, and personalized support, Benchmark gives buyers with poor credit more than just financing—it gives them a fair shot at homeownership.

Rate 

Rate, formerly Guaranteed Rate, is recognized as one of the top low-credit-score mortgage lenders, offering practical solutions for buyers who may not qualify elsewhere. The lender works with FHA loan applications starting at a 580 credit score, requiring just a 3.5% down payment. Some borrowers with credit scores of 500 may also be eligible if they can meet a 10% down payment and other criteria.  

For individuals earning under 80% of the area’s median income, the OneDown program makes purchasing a home even more affordable: buyers contribute 1%, and Rate adds a 2% grant. The lender also offers conventional loan options like HomeReady and Home Possible. These programs welcome non-traditional credit histories and often enable buyers to use grants, gift funds, or other forms of down payment assistance. 

Veterans United 

If you're a veteran or active-duty service member with bad credit, Veterans United may still help you qualify for a VA loan, even if your credit score falls below the typical 620 threshold. This provider reviews each mortgage application individually and may approve buyers who meet other financial benchmarks. VA loans have significant advantages: no down payment, no mortgage insurance, and more flexible underwriting than most conventional options.

Beyond VA loans, Veterans United offers FHA loans with 3.5% down for credit scores of 580 or higher. It also provides conventional loan options with 3% down, though you’ll pay private mortgage insurance if your down payment is under 20%. For eligible buyers in rural areas, USDA loans offer zero-down financing.

What counts as bad credit for a mortgage?

If you're looking at mortgage lenders that work with bad credit, you might wonder what is considered a “bad credit score.” Most lenders use your FICO score to decide. Here’s a general guide:

• Below 580: Bad credit
• 580–669: Fair credit
• 670–739: Good credit
• 740 and up: Excellent credit

That said, loan officers don’t all follow the same rules. One might turn you down for a 580 credit score, and another might be willing to work with you, especially if you have a large down payment or a reasonable explanation for past issues in your credit history.

A low credit score doesn’t mean you can’t get a mortgage loan. You just need the right lender. That’s where our list of the best mortgage lenders for bad credit can help.

How low credit scores affect your mortgage rates

Even if you receive approval for a home loan, having a low score results in a higher mortgage rate compared to someone with a better score. That’s unavoidable.

How much higher? FICO has a calculator that could give you an idea. It actually doesn't go below 620, but it can give you a feel for the difference a credit score makes.

Even a $30 higher monthly payment can cost you over $10,000 in extra interest. The lower your credit score, the more you'll likely pay over time. Here's how the numbers looked for a $250,000 mortgage (though keep in mind that these will vary as mortgage rates change daily):

*Interest rates and payments were sampled in June 2024 and may not reflect current market rates

What to do if your credit score is too low for a mortgage

If your FICO score feels too low for a home loan, you might still have a real shot at getting a mortgage with bad credit.

Start by paying down credit cards or auto loans to improve your debt-to-income ratio. That makes you look less risky during the application process, even with a lower score. Saving for a larger down payment helps, too. Lenders may overlook a bad credit score if you can put down 20%.

You could also apply with a co-signer who has a higher credit score, but this carries big risks for them. If you default, they’re responsible for the loan amount, so it should be a last resort.

What is your best long-term move? Build your credit. Keep credit usage under 30%, make on-time payments, and focus on progress—not perfection. Every slight improvement improves your mortgage eligibility.

How to get a mortgage with bad credit

With the right strategy, you can find bad credit mortgage lenders, explore the types of loans that fit your situation, and even connect with banks that will refinance with bad credit. Whether buying your first home or refinancing one, these steps can help you move forward confidently.

Step 1: Review your credit history

Start by checking your credit report at AnnualCreditReport.com. Look for errors, late payments, and negative marks from credit bureaus like Experian and TransUnion. Dispute anything inaccurate. To improve your score, maintain a timely payment history, reduce debt, and hold off on new credit. Just know that serious items like bankruptcy or foreclosure may stay on your report for several years.

Step 2: Look into mortgages for bad credit

Some loan programs are built for buyers with low credit scores. FHA loans (which require mortgage insurance) are standard, and VA and USDA loans offer even more flexibility if you qualify. Some lenders also provide non-QM loans for borrowers with unique financial situations. These may come with higher rates, but they can be helpful when traditional options aren’t a fit.

Step 3: Talk to a mortgage broker

A mortgage broker can help match you with lenders that work with bad credit borrowers. Brokers are licensed (look for an NMLS number) and can save you time by presenting multiple options tailored to your finances.

Step 4: Save for a larger down payment

The more you can put down, the better. A larger down payment lowers your risk to lenders, could help you skip mortgage insurance, and may improve your approval odds—even with bad credit. Some loans accept low down payments, but saving more can give you a firmer footing.

Step 5: Consider a co-applicant

If someone you trust has good credit and a steady income, adding them as co-applicants may improve your application. Just be sure both of you fully understand the financial commitment. If the loan goes unpaid, they’re equally responsible.

Step 6: Compare multiple lenders

Rates and terms vary. Don’t stop at the first offer. Compare multiple bad credit mortgage lenders, including banks, credit unions, and online lenders. Look at interest rates, loan amounts, fees, and customer service. Try getting preapproved with more than one lender to compare real numbers.

Types of home loans for borrowers with bad credit

The best bad credit mortgage lenders offer a variety of loan programs—some with more flexible credit score requirements than others. Here’s a quick breakdown of the main types of mortgages for bad credit.

FHA loans

Backed by the Federal Housing Administration, FHA loans are the go-to choice for many borrowers with poor credit. Most lenders require a 580 credit score and 3.5% down. But if you can put down 10%, you may qualify with a score as low as 500.

Conventional loans

Conventional mortgages meet Fannie Mae and Freddie Mac standards. You'll usually need a credit score of 620 and a 3% down payment. These loans are harder to qualify for with bad credit but may offer better rates and terms if your score improves.

VA loans

You may be eligible for a VA loan through the Department of Veterans Affairs if you're a veteran or active-duty service member. There’s no official minimum credit score, but many lenders want at least 620. Some go lower—580 or even less—especially if you can explain past credit issues.

USDA loans

Designed for buyers in rural areas, USDA loans require no down payment and are backed by the U.S. Department of Agriculture. Most lenders require a 640 credit score, so these loans work best for buyers with fair credit or higher.

Non-conforming loans

These loans don’t follow Fannie Mae or Freddie Mac rules, which means lenders set their terms. Some accept credit scores below 600 but often charge higher interest rates. Still, non-conforming loans can be an option if other routes are off the table.

Streamline Refinance loans

Already have a government-backed loan? You may qualify for a streamline refinance, a faster way to refinance with bad credit. These programs often skip the credit check and home appraisal and typically don’t require a review of your home equity. If you've made on-time payments, this could be a low-hassle way to improve your loan terms without needing a high credit score.

FAQ: Mortgage lenders for bad credit

Don’t let bad credit stop you—see who’s lending now

You don’t need perfect credit to get a mortgage; you just need the right lender. If one lender says no, another might say yes. That’s why comparing offers is so important. The lenders on this list are a smart place to start. Click below to explore your options and take the first step toward homeownership.

Methodology

To find the best mortgage lenders for bad credit, we started with a list of the 50 biggest lenders from last year (the most recent data available at the time of writing per the Consumer Financial Protection Bureau's Home Mortgage Disclosure Act (HMDA) Data). We compared mortgage companies based on criteria crucial for borrowers with poor credit or limited financial resources. This included evaluating minimum credit score requirements, the availability of FHA loans, and online customer ratings. Additionally, our editorial team thoroughly reviewed each lender’s mortgage offerings to ensure they are well-suited for individuals with fair credit scores. Lenders must file annually under the HMDA Act and provide the average interest rates and fees based on loan-level data. The editorial team of The Mortgage Reports conducts all mortgage lender reviews independently. You can read our complete editorial disclosures here.