Best Mortgage Lenders for Poor Credit

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Qualifying for a mortgage with poor credit is more difficult, but not impossible with the right lender. 

If you have poor credit or a score below 580, qualifying for a mortgage can be more difficult than it is for those with higher scores. The good news is it is not impossible. Home loans are available for borrowers with scores as low as 500, if you choose the right lender and loan type. 

Read on for some of the best mortgage lenders for borrowers with poor credit. 

Quick Winners List

• Best for a Variety of Options: New American Funding
• Best for No Credit History: Guild Mortgage
• Best for Relationship Benefits: Citibank
• Best for Down Payment Assistance: CrossCountry Mortgage
• Best for Future Refinancing: LoanDepot

Best for a Variety of Options: New American Funding

Pros: 

• Wide variety of loan types
• Offers VA and FHA loans
• Educational resources for first-time homebuyers
• Check current rates online

Cons: 

• Higher credit score requirements on some loan types
• Physical branches not available in all states

Nitty Gritty: New American Funding is one of our top picks for variety, offering several kinds of home loans including VA and FHA loans, which have more flexible down payment requirements. It also has various options for non-traditional borrowers, including self-employed borrowers. It allows you to use bank statements to verify your income instead of trying to qualify with tax returns, W-2s or pay stubs, which you might not have with a fluctuating or lump-sum income.

New American Funding is also an excellent lender for first-time home buyers, offering educational resources to help first-timers understand the mortgage process. 

Best for No Credit History: Guild Mortgage

Pros: 

• Programs available for borrowers with no credit
• Variety of loan types
• Calculators for estimating payments, buying power and more
• Online application

Cons: 

• Not available in all states
• Interest rates not public

Nitty Gritty: If you don’t have a credit score, Guild Mortgage offers a path to homeownership with its Complete Rate program. It uses alternative data to qualify borrowers for a loan, including rental payment and utility bill history. The program is available for FHA, VA and USDA loans with low down payment options. Guild also offers a variety of mortgage calculators on its site to help you estimate affordability and buying power. 

Best for Relationship Benefits: Citibank

Pros: 

• Closing cost and interest rate discounts for existing customers
• First-time homebuyer resources
• Offers FHA and VA loans
• Down payment assistance program

Cons: 

• Slower approval times 
• Branches not available in all states

Nitty Gritty: Citibank is a large national bank offering several types of mortgage available to those with lower credit scores, including FHA and VA loans. The bank also offers relationship benefits to existing customers who apply for a mortgage, including savings on closing costs or lower interest rates depending on your balances in your eligible accounts. Additionally, Citi offers programs that make home buying more accessible, including both down payment assistance and low down payment options. 

Best for Down Payment Assistance: CrossCountry Mortgage

Pros: 

• Down payment assistance programs available
• Offers FHA, USDA and VA loans
• Variety of non-QM loans for non-traditional income
• Educational resources for first-time homebuyers

Cons: 

• Rates aren’t published online
• Does not offer online preapproval

Nitty Gritty: CrossCountry Mortgage is one of Benzinga’s top choices for self-employed borrowers thanks to its flexible income verification options and various non-traditional loan types. In addition to conventional loans, the lender offers government-backed loans including FHA and VA loans, which can be more accessible to those with poor credit. If affording a down payment is a barrier to homeownership, you may be able to qualify for one of the lender’s down payment assistance programs as well, of which the mortgage provider has several options to choose from. 

Best for Future Refinancing: LoanDepot

Pros: 

• Lifetime Guarantee waives future refinancing fees
• Flexible loan terms available
• Offers FHA and VA loans
• “No steering” policy

Cons: 

• Can’t view rates online
• Fewer loan options than competitors

Nitty Gritty: Borrowers with lower credit scores don’t usually qualify for the best interest rates and terms. However, if you want to refinance down the line when your score improves, LoanDepot makes that process easier. The lender’s Lifetime Guarantee waives lender fees if you refinance in the future. LoanDepot offers conventional, FHA and VA loans, with some loans available to those with credit scores as low as 500. 

What Mortgage Can You Get With Poor Credit? 

Credit scores help lenders determine the amount of risk they take on extending a loan to a particular borrower and with a loan as large as a mortgage, mortgage providers need to ensure that you can pay back what you owe. 

“Typically, it's really hard to get a mortgage with anything less than a 620 credit score,” said Christina McCollum, a Washington-based producing market leader for Churchill Mortgage. 

Even with Federal Housing Administration (FHA) loans, which have lower credit score requirements than other types of home loan, it can be hard to get approved with poor credit, said McCollum. 

Still, there may be options available for those with lower scores. 

For instance, veterans may qualify for a Department of Veterans Affairs (VA)-backed loan, which has more flexible credit and down payment requirements. 

“The VA has a higher threshold for risk, so you could have a lower credit score and higher debt-to-income ratio and still get an approval,” said McCollum.

However, if you don’t qualify for this type of loan, it can be more difficult to qualify for a mortgage. Additionally, loans you do qualify for will likely have less favorable terms than those offered to those with good credit. 

“In general, having a credit score above 700 can improve your chances of qualifying for more favorable interest rates and loan terms,” said Justin Zakocs, head of residential lending at Cambridge Savings Bank.

If you want to ensure you have plenty of options when shopping for a mortgage and can qualify for a good interest rate, you may want to consider working to improve your credit before buying a home. 

“Whether or not you should wait to buy a home until your credit improves depends on your personal financial situation and long-term goals…Waiting to improve your credit can offer several advantages, such as better interest rates, more favorable loan terms, increased chances of approval and lower monthly payments,” said Zakocs.

Just keep in mind that if you do put off a home purchase, you take the risk of interest rates or home prices rising. 

“As you weigh your options, consider how low your current credit score is, how quickly you might be able to improve it, the current conditions of the local real estate market, your overall financial situation and your long-term goals,” advised Zakocs. 

Why You Should Trust Us

Emily Sherman is a financial journalist with over seven years of experience writing about credit, banking and mortgages. She has written for publications including U.S. News & World Report and Buy Side from the Wall Street Journal. In addition to ensuring all information about lenders on this page is accurate according to their websites, she consults experts in mortgage lending to provide reputable advice on getting a mortgage with poor credit.  

Methodology 

Benzinga evaluates mortgage lenders based on various factors, including rates and fees, accessibility and customer service. We look for lenders that offer competitive interest rates, highly rated customer support systems and a variety of mortgage types for borrowers from all credit score ranges. Read our full methodology here. 

FAQ

Sources

• Christina McCollum, producing market leader for Churchill Mortgage
•  Justin Zakocs, head of residential lending at Cambridge Savings Bank