Bad Credit Mortgage Lenders | The Best Lenders of 2024

Bad credit? These lenders might be able to help

Bad credit mortgage lenders can help even if your FICO score isn’t as good as you’d like.

In fact, some of the very best lenders out there are willing to work with borrowers who have credit scores near or below 600. Of course, not everyone will qualify. And your rate will be higher than that of a “prime” mortgage borrower.

But you can still shop around for the best interest rate, fees, and customer service, just like any other home buyer. Here’s where we recommend starting your search.

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 loan with bad credit can be a challenging task. However, several lenders specialize in offering bad credit home loans.

Our analysis of average mortgage interest rates* reveals the 10 top bad credit mortgage lenders in 2024.

It’s important to remember that while these lenders may be more accommodating, building strong personal finance habits and striving to improve your credit score can help you secure even better loan terms in the future.

*From our list of the top 10 lenders for 2024, these are the lenders best suited for poor-credit borrowers due to their minimum credit score requirements.

Our top 10 mortgage lenders for bad credit at a glance

Top bad credit mortgage lenders for 2024

To find the lenders that were best for borrowers with bad credit, we looked at loan-level data filed in 2023 under the Home Mortgage Disclosure Act (HMDA).

Keep in mind that, despite being relatively stable at the start of the year, 2024 has witnessed some big shifts in mortgage interest rates. By the end of May, the average 30-year fixed mortgage rate exceeded 7%, which was still higher than historical standards. Lenders may therefore modify their credit score requirements in response to these rate changes in order to more effectively manage their risk.

Even so, using these average credit score minimums gives you a useful starting point for comparison shopping by allowing you to compare lenders side by side.

1. DHI Mortgage Company

DHI Mortgage Company is among the best bad credit mortgage lenders for its diverse loan options and strong customer service. With flexible credit score requirements starting at 580 for FHA loans and 620 for conventional loans, DHI Mortgage accommodates a broader range of applicants.

As a subsidiary of D.R. Horton, the company benefits from extensive industry experience and resources, offering a variety of mortgage products tailored to meet the needs of home buyers. DHI Mortgage offers a variety of loan options, including conventional, FHA, VA, and USDA loans, to meet the needs of different borrowers, such as first-time homebuyers and veterans.

The company provides a range of down payment assistance programs and grants with the goal of increasing accessibility to homeownership. These initiatives are especially beneficial for first-time buyers who may face challenges with upfront expenses.

Pros

• Diverse loan options, including conventional, FHA, VA, and USDA loans.
• Down payment assistance programs and grants are available.
• Strong, personalized customer service throughout the mortgage process.
• Potential incentives and discounts on D.R. Horton-built homes.

Cons

• Limited availability in some states.
• Potential bias towards D.R. Horton-built homes.

2. Cornerstone Home Lending

Cornerstone Home Lending is a top choice for home buyers with bad credit, offering a diverse selection of mortgage options and exceptional customer service. With flexible credit score requirements starting at 580, Cornerstone opens doors to homeownership for many who may have faced financial challenges in the past.

With over 30 years of experience, Cornerstone understands the unique needs of borrowers and provides personalized solutions to help them achieve their homeownership goals. Whether you’re looking for a conventional loan, FHA loan, VA loan, USDA loan, or jumbo loan, Cornerstone has you covered.

The company also helps people with down payments and grants, which makes it easier for first-time buyers and people who don’t have much saved to buy a house.

Pros

• Extensive loan options to suit various financial situations.
• Down payment assistance programs and grants are available.
• Dedicated loan officers provide personalized guidance.
• Helpful online resources and tools for borrowers.

Cons

• Fees may be higher compared to some competitors.
• Limited availability in certain regions.

3. Academy Mortgage

Academy Mortgage is a top-tier lender for home buyers with bad credit, offering a wide array of loan options and exceptional customer service. With flexible credit score requirements, Academy Mortgage accommodates borrowers with different credit profiles.

With over 30 years of experience, Academy Mortgage is dedicated to making homeownership accessible to a broad range of borrowers. From conventional loans to FHA, VA, USDA, and renovation loans, Academy Mortgage provides a variety of options to suit the needs of both first-time homebuyers and those looking to refinance or renovate.

There are also a number of down payment assistance programs and grants available through the company. These can be especially helpful for first-time buyers who may not have a lot of money for a down payment.

Pros

• Extensive loan options, including renovation loans.
• Down payment assistance programs and grants are available.
• Dedicated loan officers provide personalized guidance.
• Comprehensive online resources and educational content.

Cons

• Regional availability may be limited.
• Some borrowers report higher closing costs compared to other lenders.

4. loanDepot

loanDepot is a top choice for homebuyers with less-than-perfect credit, offering a wide range of loan options and exceptional customer service. With flexible credit score requirements, loanDepot accommodates borrowers with different credit histories.

Known for its innovative use of technology, loanDepot has quickly become one of the largest non-bank lenders in the United States since its founding in 2010. From conventional loans to FHA, VA, jumbo loans, and home equity loans, loanDepot provides a variety of options to suit the needs of both first-time homebuyers and those looking to refinance or leverage their home equity.

Additionally, this lender provides access to a number of grants and programs for down payment assistance, which can be especially helpful for first-time buyers who might require financial assistance for the upfront costs of homeownership.

Pros

• Wide range of loan options, including home equity loans.
• Access to down payment assistance programs and grants.
• Strong emphasis on technology for a streamlined process.
• Excellent customer service and a user-friendly digital application.

Cons

• Fees may be higher compared to some competitors.
• Some customers may prefer a more personal, less digital-heavy process.

5. Cardinal Financial

Backed by a diverse range of loan programs and an efficient mortgage application process, Cardinal Financial is among the best bad credit mortgage lenders. Cardinal Financial’s flexible credit score requirements, starting at 620 for conventional loans and 580 for FHA loans, make it an attractive option for those with less-than-perfect credit.

Established in 1987, the company leverages technology to enhance the borrower experience and cater to the needs of diverse borrowers, from first-time home buyers to those refinancing expensive real estate properties. Cardinal Financial offers flexibility and choice to borrowers with a variety of financial situations through a broad range of mortgage products, such as conventional loans, FHA loans, VA loans, USDA loans, and jumbo loans.

The mortgage lender also offers access to numerous down payment assistance programs and grants, which can be particularly beneficial for first-time home buyers and low-to-moderate income borrowers.

Pros

• Extensive loan options to meet diverse borrower needs
• Access to down payment assistance programs and grants.
• Personalized assistance through dedicated loan officers.
• User-friendly online tools and a seamless digital application process.

Cons

• Limited physical branch locations.
• Some borrowers report higher closing costs compared to other lenders.

6. Paramount Residential

Paramount Residential Mortgage Group (PRMG) is one of the best bad credit mortgage lenders, with a wide selection of loan options and a customer-centric approach. PRMG’s flexible credit score requirements, starting at 620 for conventional loans and 580 for FHA loans, make homeownership accessible to more borrowers, including those with less-than-perfect credit.

Established in 2001, PRMG serves borrowers across the United States, addressing the needs of first-time homebuyers, veterans, and those looking to refinance or purchase high-value properties. With a wide array of mortgage products, including conventional loans, FHA loans, VA loans, USDA loans, and jumbo loans, PRMG provides flexibility and choice for borrowers with various financial situations.

First-time buyers and borrowers with low to moderate incomes can benefit from the company’s various down payment assistance programs and grants.

Pros

• Broad selection of loan options to address diverse needs.
• Access to down payment assistance programs and grants.
• Personalized guidance through dedicated loan officers.
• Advanced online tools and resources for informed decision-making.

Cons

• Regional availability may vary.
• Some borrowers report longer processing times compared to other lenders.

7. Guaranteed Rate

Providing a large selection of loan options and top-notch customer service, Guaranteed Rate is one of the best mortgage lenders for bad credit. With flexible credit score requirements, starting at 620 for conventional loans and 580 for FHA loans, Guaranteed Rate makes homeownership accessible to borrowers with varying credit profiles.

Founded in 2000, Guaranteed Rate is known for its innovative technology and customer-focused approach, catering to the diverse needs of homebuyers. From conventional loans to FHA, VA, USDA, and jumbo loans, Guaranteed Rate provides a comprehensive array of mortgage products to suit various financial situations.

For first-time buyers and those with limited upfront funds, the company also provides access to a variety of grants and down payment assistance programs.

Pros

• Wide range of loan options to meet diverse needs.
• Access to down payment assistance programs and grants.
• Strong emphasis on technology for a streamlined process.
• Excellent customer service and a user-friendly digital mortgage platform.

Cons

• Fees may be higher compared to some competitors.
• Some customers may prefer a more personal, less digital, underwriting process.

8. Primelending

For borrowers with less-than-perfect credit, PrimeLending is a top choice among bad credit mortgage lenders, offering a wide range of loan programs and personalized service. PrimeLending’s flexible credit score requirements, starting at 620 for conventional loans and 580 for FHA loans, accommodate borrowers with various credit histories.

Established in 1986, PrimeLending is known for its commitment to simplifying the mortgage process and making homeownership more accessible to a diverse group of borrowers. With an extensive array of mortgage products, including conventional loans, FHA loans, VA loans, USDA loans, jumbo loans, and renovation loans, PrimeLending caters to the needs of first-time home buyers, military service members, homeowners looking to refinance, and borrowers interested in home improvement projects.

Additionally, the company offers access to a number of grants and programs for down payment assistance, which can be particularly helpful for first-time home buyers and those with limited resources.

Pros

• Diverse loan options to suit a wide range of borrower needs.
• Access to down payment assistance programs and grants.
• Personalized guidance through dedicated loan officers.
• Comprehensive online tools and resources for informed decision-making.

Cons

• Fees may be higher compared to some competitors.
• Regional availability may vary.

9. Rocket Mortgage

When it comes to bad credit mortgage lenders, Rocket Mortgage stands out for its innovative use of technology and wide array of loan options. Rocket Mortgage’s flexible credit score requirements, starting at 620 for conventional loans and 580 for FHA loans, make homeownership accessible to borrowers with a range of credit profiles.

A division of Quicken Loans, Rocket Mortgage has been revolutionizing the mortgage industry since 1985, focusing on providing a fast and efficient digital mortgage experience. With a comprehensive selection of mortgage products, including conventional loans, FHA loans, VA loans, jumbo loans, and refinancing options, Rocket Mortgage caters to the diverse needs of first-time home buyers, veterans, and those looking to refinance or purchase high-value real estate.

The company also provides access to various down payment assistance programs and grants, which can be particularly beneficial for first-time homebuyers and those with limited funds for a down payment.

Pros

• Wide range of loan options to address diverse borrower needs.
• Access to down payment assistance programs and grants.
• Strong emphasis on technology for a fast and efficient process.
• Personalized assistance through a digital platform and dedicated mortgage experts.

Cons

• Digital underwriting processes may not appeal to those who prefer face-to-face interaction.
• Fees may be higher compared to some competitors.

10. Citizens Bank

For borrowers with less-than-perfect credit searching for reliable bad credit mortgage lenders, Citizens Bank is a strong contender, offering a wide range of loan options and personalized service. With flexible credit score requirements starting at 620 for conventional loans and 580 for FHA loans, Citizens Bank accommodates borrowers with varying credit profiles.

With a long history dating back to 1828, Citizens Bank has established itself as a trusted financial institution, providing mortgage lending services to a diverse group of borrowers. Citizens Bank offers a variety of mortgage products, including conventional loans, FHA loans, VA loans, jumbo loans, and adjustable-rate mortgages (ARMs). These options are designed to meet the needs of first-time home buyers, those looking to refinance, and buyers of high-value properties.

The bank also provides access to several down payment assistance programs and grants, making homeownership more accessible for first-time buyers and those with limited funds for a down payment.

Pros

• Diverse loan options to suit different borrower needs.
• Access to down payment assistance programs and grants.
• Personalized assistance through dedicated loan officers.
• Comprehensive online tools and resources for informed decision-making.

Cons

• Regional availability may vary.
• Some borrowers report longer processing times compared to other lenders.

What’s considered bad credit for a mortgage?

We’re talking about bad credit mortgage lenders here. But what exactly is “bad credit”?

Many lenders follow the scoring model from FICO, the company that created the most widely used scoring technologies. It reckons that anything below 580 counts as “poor.”

If your score is in the 580–669 range, it’s actually considered “fair.” If it’s between 670 and 739, it’s good,” and anything above that is “exceptional.”

• Below 580: Bad credit
• 580-669: Fair credit
• 670-739: Good credit
• Above 740: Excellent credit

However, it’s important to understand that the definition of “bad credit” can vary because lenders are free to define their own score ranges however they like. That means what one lender considers a bad credit score could be perfectly acceptable to another lender.

Just because your score is in the low range doesn’t mean you can’t get approved for a mortgage. But you’ll likely need a sizable down payment and a good story that explains your low score and shows that its cause is in your past.

You’re also likely to have to seek out a sympathetic lender. And that’s where our list of the best bad credit mortgage lenders can come in handy.

How low credit scores affect your mortgage rates

Even if you’re approved for a home loan, a low score means you’re going to pay a higher mortgage rate than 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.

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

The monthly differences may look small. But even if you pay just $30 more per month, your total interest costs go up by $10,000.

As credit scores decline, the difference in interest rates and payments grows.

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

The obvious way to get a mortgage with bad credit is to improve your score. You may be surprised at how quickly you can make a material difference.

There are other ways to qualify for a mortgage with bad credit, too.

1. Pay down as much existing debt as you can. If you’re a more attractive borrower in other respects, lenders may be more forgiving about your score. Paying down existing debts, like credit cards and auto loans, improves your debt-to-income ratio (DTI). This has a big impact on your home loan eligibility
2. Build up your savings. Making a larger down payment can also help your case, as it reduces your risk to the mortgage lender. Borrowers with a cushion against financial problems are less likely to default. If you’re able to make a 20% down payment, a low credit score might not matter as much
3. Qualify on a friend's or relative's good credit. If you can get someone with good or great credit to co-sign your mortgage application, your problems may be over. But it’s a huge ask because your loved one could lose a lot of money and creditworthiness if your loan goes bad

We wouldn’t recommend asking for a co-signer in any but the most exceptional circumstances, because this can be a huge risk to the person helping you out. If your loan defaults, they’re on the line for the money.

Instead, we recommend steadily building up your credit score. Even if you can’t pay off big debts in full, making on-time payments and keeping your credit usage under 30% can go a long way toward improving your score and boosting your mortgage eligibility.

How to get a mortgage with bad credit

Securing a mortgage with bad credit can be challenging, but it’s not impossible. By understanding your credit situation, exploring suitable mortgage options, and working with the right bad credit mortgage lenders, you can increase your chances of achieving your homeownership goals. Whether you’re a first-time homebuyer or looking to refinance, the following steps will guide you through the process.

Step 1: Assess Your credit history

Start by obtaining a free copy of your credit report from AnnualCreditReport.com. Review your report for errors, late payments, and information from credit bureaus like Experian and TransUnion. Dispute any inaccuracies that may be negatively impacting your credit score. Work on improving your credit by avoiding late payments, reducing debt, and avoiding new credit inquiries. Be aware that serious negative items like bankruptcy or foreclosure can remain on your credit report for years.

Step 2: Explore suitable mortgages for bad credit

Research mortgage options that cater to borrowers with lower credit scores who are looking to make a home purchase. Government-backed loans—such as FHA loans, which require mortgage insurance, VA loans for eligible service members, and USDA loans offered by the U.S. Department of Agriculture—often have more lenient credit requirements and lower interest rates. Some lenders may also offer non-conforming mortgage products tailored to borrowers with unique financial situations to help them achieve their goal of a home purchase.

Step 3: Consider working with a mortgage broker

A mortgage broker can be a valuable resource when searching for bad credit mortgage lenders. They have access to a wide range of lenders and can help you find the most suitable mortgage products for your situation. Mortgage brokers are licensed professionals with an NMLS number, ensuring they adhere to strict industry standards.

Step 4: Save for a larger down payment

Saving for a larger down payment can help compensate for the perceived risk associated with bad credit and may allow you to avoid costly mortgage insurance. While some loans offer low down payment options, aiming for a higher down payment demonstrates your commitment and financial stability to lenders. A larger down payment can also lower your mortgage payments. Keep in mind that the minimum down payment requirements may vary depending on the type of loan and your credit profile.

Step 5: Consider adding a co-applicant

If you have a family member or friend with a strong credit history and stable income, consider adding them as a co-applicant on your mortgage. This can help boost your overall creditworthiness and increase your chances of approval. However, ensure that both parties understand the long-term financial commitment and responsibilities involved.

Step 6: Compare multiple lenders

Don’t settle for the first lender you come across. Shop around and compare offers from multiple bad credit mortgage lenders, including banks, credit unions, and online lenders. Pay attention to factors such as interest rates, loan amount, fees, and customer service. Consider getting prequalification or preapproval from several lenders to compare loan amounts and terms. Reach out to lenders in your area, such as those in New York City or other major cities, as they may have specialized knowledge of local housing markets and programs.

By following these steps and working closely with bad credit mortgage lenders, you can navigate the challenging landscape of securing a mortgage with less-than-perfect credit. Remember to be patient, persistent, and proactive in improving your financial situation to unlock more favorable mortgage products and terms in the future.

Types of mortgages available to bad credit borrowers

When evaluating the best bad credit mortgage lenders, it’s essential to understand the various loan options available. While some mortgage products may have more stringent credit requirements, others are designed to accommodate borrowers with lower credit scores. Here are the main types of mortgages most lenders offer.

FHA loans

FHA loans, backed by the Federal Housing Administration, are the most popular option for borrowers with bad credit. Most borrowers need a minimum credit score of 580 and a 3.5% down payment to qualify. But if you can make a 10% down payment, you may be approved for an FHA mortgage with a credit score of 500–579.

VA loans

If you are a veteran or active duty service member, the Department of Veterans Affairs may offer a VA loan to you. VA loans have no formal minimum credit score. But most lenders want at least 620. Some go as low as 580. And a few, such as Navy Federal Credit Union, don’t specify a score and may be sympathetic if yours is low for a good reason.

USDA loans

USDA loans typically require a credit score of at least 640, so they may not be the best for low-credit borrowers. But if your score is high enough, you can use a USDA loan to purchase a home with no down payment. The U.S. Department of Agriculture backs these loans, which encourage homeownership in rural areas.

Non-conforming loans

Non-conforming loans do not meet the standards set by Fannie Mae and Freddie Mac, meaning they’re not eligible for backing from those agencies. These loan programs, for which banks and lenders set their own rules, may allow credit scores below 600. As a result, non-conforming loans typically have higher interest rates, but they may be available to borrowers with low credit scores.

Conventional loans

Conventional mortgages are loans that conform to standards set by Fannie Mae and Freddie Mac. They typically require a minimum credit score of 620 and a 3% down payment. While conventional loans may be more challenging to qualify for compared to FHA loans, they can offer competitive interest rates and more flexible terms for borrowers with higher credit scores.

Streamline Refinance loans

For current homeowners with bad credit who already have a government-backed loan, such as an FHA, VA, or USDA loan, streamline refinancing may be an option worth considering. Streamline refinancing offers a simplified process that often requires less documentation and may not involve a credit check or home appraisal.

If you’re a homeowner with bad credit and have a timely payment history with your current mortgage, streamline refinancing could help you secure better loan terms without the need for a perfect credit score. Keep in mind that specific qualifying requirements may vary depending on the type of government-backed loan you have and the lender you choose to work with.

FAQ: Mortgage lenders for bad credit

How to find the best mortgage rate with bad credit

Some lenders specialize in “top-tier” borrowers, who have excellent credit scores, bulletproof finances, and large down payments. But other lenders, including the six on our list, are perfectly comfortable helping those with damaged credit.

So shop around to see who can offer you the best deal. And if one lender turns you down, don’t assume they all will, because that’s not how mortgage lending works. Each lender’s business priorities can change from day to day. And different lenders offer different deals.

Putting some effort into comparison shopping could find you the loan you want at the best rate you can get.

Methodology

To find the best mortgage lenders for bad credit, we started with a list of the 50 biggest lenders in 2023 (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 conducted a thorough review of each lender’s mortgage offerings to ensure they are well-suited for individuals with fair credit scores. Average interest rates and fees were sourced from loan-level data lenders are required to file each year under the HMDA act. The editorial team of The Mortgage Reports conducts all mortgage lender reviews independently. You can read our full editorial disclosures here