Last updated: September 2026. This guide covers mortgage lenders and loan programs in the United States for borrowers with low credit scores. It is educational content, not financial advice. Lender requirements change often, so always confirm details directly with each lender.
A low credit score does not automatically shut you out of homeownership. Government backed loans, specialist lenders and a recent change to conventional loan rules mean that many borrowers with scores in the 500s and low 600s can still get a mortgage in 2026.
The catch is cost. With the average 30 year fixed rate at 7.03% in the week of September 24, 2026, according to Freddie Mac, borrowers with lower scores usually pay even more. In this guide we compare lenders known for working with lower credit scores, explain which loan types are easiest to qualify for, show what a low score really costs and share practical steps to improve your chances.
What Counts as “Bad Credit” for a Mortgage?
Lenders mostly use FICO scores, which range from 300 to 850. As a rough guide:
| FICO score | How lenders often see it |
|---|---|
| 800 to 850 | Exceptional |
| 740 to 799 | Very good; qualifies for the best pricing |
| 670 to 739 | Good |
| 580 to 669 | Fair; many loan options remain, at higher cost |
| Below 580 | Poor; options are limited but not zero |
For mortgages, a score below about 620 is usually treated as low, and a score below 580 limits you mainly to FHA loans with a larger down payment or specialist lenders.
Best Mortgage Lenders for Bad Credit at a Glance
The table below summarizes minimum credit scores published or reported for lenders that are frequently recommended for borrowers with lower scores. Minimums can change and may depend on the loan, down payment and other factors.
| Lender | Lowest reported minimum score | Loan types | Notable features |
|---|---|---|---|
| Rocket Mortgage | 580 (FHA) | Conventional, FHA, VA, jumbo | Fast online preapproval; free Fresh Start credit program |
| FourLeaf Federal Credit Union | 500 (FHA); 580 (conventional) | Conventional, FHA | Some of the lowest published minimums |
| CrossCountry Mortgage | 500 (FHA) | Conventional, FHA, VA, USDA | Programs for low income buyers |
| Guild Mortgage | 540 (FHA) | Conventional, FHA, VA, USDA | Strong focus on government loans |
| Tomo | 580 | Conventional, FHA | Advertises no origination or processing fees |
| Optimum First Mortgage | 580 | Conventional, FHA, USDA | Same day preapprovals and fast closings |
| Pennymac | 580 (FHA); 620 (conventional, VA) | Conventional, FHA, VA, USDA | Large lender with a government loan focus |
| LowRates.com | 500 (VA); 580 (FHA) | Conventional, FHA, VA | Down payment assistance options |
| Better | 580 (FHA); 620 (conventional) | Conventional, FHA, VA | Online only; fast preapproval |
| Citi | 580 | Conventional, FHA, VA, jumbo | HomeRun low down payment program; up to $5,000 lender credit in some areas |
Sources: lender websites and published reviews from Bankrate, CNBC Select and NerdWallet, 2026. Always confirm current requirements with the lender.
Lender Profiles
Rocket Mortgage
One of the largest mortgage lenders in the US, Rocket accepts FHA borrowers from a 580 score and offers conventional, VA and jumbo loans. Its Fresh Start program offers free credit guidance to help applicants who do not yet qualify improve their credit before applying. Rocket does not offer USDA loans.
Best for: borrowers who want a fast, largely online process with support to improve their credit.
FourLeaf Federal Credit Union
FourLeaf stands out for published minimums as low as 500 for FHA and 580 for conventional loans. As a credit union, membership is required, and availability may depend on where you live.
Best for: borrowers with very low scores who can meet the larger FHA down payment required below 580.
Tomo
Tomo is an online lender that accepts scores from 580 for both FHA and conventional loans and advertises no origination or processing fees, which can help offset the higher rates that lower credit borrowers often pay.
Best for: cost conscious borrowers comfortable with a digital process.
Optimum First Mortgage
Optimum First accepts FHA and conventional borrowers from 580 and offers USDA loans, same day preapprovals and fast closing times.
Best for: buyers in competitive markets who need to move quickly.
Pennymac
Pennymac is a major lender with strong government loan programs, including FHA, VA and USDA loans. Minimum scores are 580 for FHA and 620 for conventional and VA loans.
Best for: borrowers who want a large, established lender with all major government programs.
CrossCountry Mortgage and Guild Mortgage
Both are large retail lenders with a strong focus on government backed loans. CrossCountry has been reported to accept FHA borrowers with scores as low as 500, and Guild from 540, subject to down payment and other requirements. Both offer FHA, VA and USDA loans and work with down payment assistance programs.
Best for: borrowers with scores in the 500s who want a lender experienced with FHA loans and in person loan officers.
Which Loan Types Are Easiest to Get With Bad Credit?
| Loan type | Typical minimum score | Down payment | Key points |
|---|---|---|---|
| FHA loan | 580 (3.5% down); 500 to 579 (10% down) | 3.5% or 10% | The most common option for low scores; mortgage insurance often lasts the life of the loan |
| VA loan | No official minimum; lenders often want 580 to 620 | 0% | For eligible veterans, service members and some surviving spouses |
| USDA loan | No official minimum; lenders often want 640 for automated approval | 0% | For eligible rural and suburban areas, with income limits |
| Conventional loan | Often 620 at most lenders | From 3% | Fannie Mae removed its 620 floor for automated underwriting in November 2025, but many lenders still apply their own minimum |
| Non QM loan | Varies; some from 500 to 580 | Often 10% to 20% or more | Higher rates and fees; for borrowers outside standard rules |
A change to conventional loans
In November 2025, Fannie Mae removed the 620 minimum credit score for loans approved through its Desktop Underwriter system. Instead, the system looks at the overall risk of the application, including income, savings, debts and down payment.
In practice, many lenders still set their own minimum, known as an overlay, often at 620. But the change means some borrowers with scores below 620 and otherwise strong applications may qualify for conventional loans with lenders that follow the new rules.
What a Low Credit Score Really Costs
A lower score usually means a higher interest rate, and for conventional loans, higher mortgage insurance. Here is an illustrative example on a $300,000, 30 year fixed loan:
| Credit score | Illustrative rate | Monthly payment | Total interest over 30 years |
|---|---|---|---|
| 760 or higher | 6.90% | $1,976 | about $411,300 |
| 680 to 699 | 7.25% | $2,047 | about $436,700 |
| 620 to 639 | 7.75% | $2,149 | about $473,700 |
| 580 to 619 (FHA) | 7.00% | $1,996 plus FHA mortgage insurance | about $418,500 plus mortgage insurance |
Illustrative figures only, based on typical pricing differences. Actual rates depend on the lender, loan type, down payment and market conditions.
In this example, a borrower with a 620 score pays about $173 more each month than a borrower with a 760 score, or more than $62,000 over 30 years. FHA rates are often competitive for lower scores because they are less sensitive to credit, but FHA mortgage insurance adds to the monthly cost.
How to Get Approved With Bad Credit
1. Check your credit reports
Get free reports from Equifax, Experian and TransUnion at AnnualCreditReport.com. Dispute any errors, which can lower your score unfairly.
2. Save a larger down payment
A larger down payment reduces the lender’s risk. With an FHA loan, scores between 500 and 579 need at least 10% down.
3. Lower your debt to income ratio
Paying down debts, especially credit cards, can improve both your score and your debt to income ratio, which lenders consider alongside credit.
4. Show compensating factors
Stable employment, cash reserves and a history of paying rent on time can strengthen your application. Some lenders and programs now consider rental payment history.
5. Consider a co borrower
A co borrower with stronger credit and income can improve your chances, although lenders may still look at the lowest score on the application.
6. Compare several lenders
Minimum scores, overlays and rates vary widely. Apply with at least three lenders within a short period, usually 14 to 45 days, so the credit checks count as a single inquiry for scoring purposes.
7. Look into down payment assistance
State and local housing finance agencies offer grants and loans to help with down payments and closing costs, often with credit minimums around 620 to 640, and sometimes lower.
Quick Ways to Improve Your Score Before Applying
If you can wait a few months, small improvements can make a real difference to your rate:
- Pay down credit card balances to below 30% of your limits, and ideally below 10%.
- Make every payment on time. Payment history is the biggest factor in most scoring models.
- Avoid opening new credit in the months before you apply.
- Keep old accounts open to preserve the length of your credit history.
- Ask about rapid rescoring. Some lenders can request a quick update to your score after you pay down debts or correct errors.
Our guide to the credit score you need to buy a house explains the scores required for each loan type in more detail.
Warning Signs to Watch For
Borrowers with poor credit are sometimes targeted by predatory lenders. Be cautious if a lender:
- Guarantees approval before seeing your finances.
- Asks for large upfront fees before providing a Loan Estimate.
- Pressures you to sign quickly or to lie on your application.
- Pushes a loan with features you do not understand, such as balloon payments or steep prepayment penalties.
Legitimate lenders must provide a standard Loan Estimate within three business days of your application. Check that any lender or loan officer is licensed through the NMLS Consumer Access website.
What to Do If You Are Turned Down
A denial is not the end of the road. Ask the lender for the specific reasons, which they must provide. Then consider:
- Trying a different lender, since overlays and minimum scores vary widely.
- Speaking with a HUD approved housing counselor, who can review your finances for free or at low cost.
- Adding a co borrower with stronger credit or income.
- Saving a larger down payment to reduce the lender’s risk.
- Setting a clear credit plan and reapplying in six to twelve months.
Should You Buy Now or Wait?
With rates above 7% in September 2026 and a low credit score adding to your cost, it can sometimes make sense to spend six to twelve months improving your credit before buying. Raising your score from the low 600s to the high 600s or 700s can reduce your rate and mortgage insurance significantly.
On the other hand, if you have a stable income, can afford the payment comfortably and find the right home, buying with an FHA loan now and refinancing later, once your credit and equity improve, is a common strategy. Just do not count on a lower rate being available later.
Frequently Asked Questions
Can I get a mortgage with a 500 credit score?
Possibly. FHA loans allow scores from 500 with at least 10% down, but only a small number of lenders accept scores that low. Specialist non QM lenders may also consider them, usually at higher rates.
What is the easiest mortgage to get with bad credit?
For most borrowers, an FHA loan. Eligible veterans and service members should also consider VA loans, which have no official minimum score.
Will applying with several lenders hurt my score?
Mortgage inquiries made within a short window, usually 14 to 45 days depending on the scoring model, are generally counted as one inquiry, so comparing lenders has a limited effect.
Can I refinance later if my credit improves?
Yes. Many borrowers start with an FHA loan and later refinance into a conventional loan to remove mortgage insurance and lower their rate, once their credit and home equity have improved.
Do all lenders still require a 620 score for conventional loans?
Not necessarily. Fannie Mae removed its 620 minimum for automated underwriting in November 2025, but many lenders still apply a 620 minimum of their own. Ask each lender about its policy.
Do credit unions offer better terms for bad credit?
Sometimes. Credit unions are member owned and may be more flexible with members they know, as FourLeaf’s low minimums show. Membership rules apply, so check eligibility first.
The Bottom Line
You can get a mortgage with bad credit in 2026, most often through an FHA loan from a score of 580 with 3.5% down, or 500 with 10% down. Lenders such as Rocket Mortgage, FourLeaf, CrossCountry, Guild, Tomo and Pennymac are known for working with lower scores. Conventional loans may also be within reach for some borrowers following Fannie Mae’s rule change.
Expect to pay more with a lower score. Compare several lenders, check every Loan Estimate carefully and consider whether a few months of credit improvement could save you thousands over the life of your loan.
Disclaimer: This article is for general educational purposes only and does not constitute financial advice. We have not been paid by any lender mentioned. Credit requirements, rates and programs change frequently and may vary by location and application. Rates shown are illustrative. Always confirm terms directly with lenders and consider speaking with a HUD approved housing counselor.