Best mortgage lenders for low credit score borrowers in 2023

If you’ve got less-than-perfect credit, Bankrate has made it easier to find mortgage lenders with products that might fit your situation. Here’s our guide to the best mortgage lenders for low credit score borrowers in 2023.

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
Garden State Home Loans	620 for conventional loans	3% for conventional loans; 3.5% for FHA loans; none for VA loans and USDA loans	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	3% for conventional loans; 3.5% for FHA loans; none for VA loans and USDA loans	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

Cardinal Financial

Availability	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	Branch locations and online

Garden State Home Loans

Availability	Connecticut, Delaware, Florida, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Pennsylvania, Tennessee, Texas and Virginia
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 loans and USDA loans
Where to find	Online

Reliant Home Funding

Availability	Colorado, Connecticut, Delaware, Florida, Georgia, Illinois, Louisiana, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Vermont, Virginia, Washington and Washington, D.C.
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

U.S. Bank

Availability	All U.S. states
Loans offered	Conventional, jumbo, FHA, VA, USDA
Credit requirements	620 for conventional loans; 740 for jumbo loans
Down payment minimum	3% for conventional loans; 3.5% for FHA loans; none for VA loans and USDA loans
Where to find	Branch locations and online

Valley Bank

Availability	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	Branch locations and online

Wells Fargo

Availability	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

How a low credit score affects your mortgage

The best interest rates go to borrowers with the strongest credit scores. If you have a lower score, you’ll be quoted higher rates. If you have a lower score, you could spend several thousand more in interest over the life of your mortgage.

Say you’re obtaining a $350,000, 30-year mortgage with a fixed 7.6 percent rate. Your monthly payment would be $2,447 (excluding homeowners insurance premiums and property taxes), and you’d pay $531,258 in interest over the 30-year loan term.

If you were to improve your credit and get a lower rate of 6.9 percent instead, your monthly payment would drop to $2,305, and you’d pay $479,920 in interest for the duration of the loan. That’s a cost savings of approximately $50,000.

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 borrowers with fair or poor credit.

• Consider using a credit union or online lender, which might have more flexible loan options.

• Look into government-backed loan programs, which might 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 the 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.

FAQs

• How can I improve my credit score?

  There are many ways to boost your credit score. First, review your three credit reports from the credit reporting bureaus at AnnualCreditReport.com. If you spot any errors or inaccuracies, contact the reporting agency as soon as possible to dispute. Once you have your scores, create a plan of attack for debt. Likewise, be sure to pay all of your bills on time and in full, if possible. 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.

• Can I get approved for a mortgage with bad credit?

  It’s possible to qualify for a mortgage even if you have bad, low or poor credit. You can 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 could make an ownership claim to the property.)

• What type of mortgage can I qualify for with bad credit?

  If you have poor credit, consider an FHA loan, which allows for credit scores as low as 580 (or 500 if you can make a 10 percent down payment on the home). If you’re eligible, a VA loan (for service members and veterans) or a USDA loan (for buyers in rural areas) might also be easier to qualify for. 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.

• What is the lowest credit score needed for a mortgage?

  The lowest credit score 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 loans have a lower minimum credit score requirement 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 availability, affordability and borrower experience. Learn more about our methodology.