Best Mortgage Lenders for Bad Credit

Last reviewed: October 2026 · By the MortgageCompass Editorial Team · How we research

You can get a mortgage with bad credit in the US, but which lender and loan you can use depends mainly on your exact score. FHA loans accept scores from 580 with 3.5% down, and from 500 with 10% down, although many lenders set their own minimum of 580 or 620. Conventional loans usually need at least 620. Below that, specialist non-QM lenders may still lend, but at much higher rates. The best “bad credit lender” is therefore usually an FHA lender that does not add extra requirements on top of the program rules, and the best long-term saving is often to raise your score before you apply.

MortgageCompass is not a lender, does not offer credit repair and is not paid by any lender.

Your options by credit score

SCORE 500 TO 579

FHA with 10% down

Allowed by FHA rules, but only some lenders accept these scores. Expect manual underwriting and close checks on your payment history and debts. Non-QM loans are another route, with higher rates and larger deposits.

SCORE 580 TO 619

FHA with 3.5% down

The main option for most borrowers in this range. VA loans may also work for eligible veterans, as VA sets no minimum score itself. Shop lenders, because minimums vary.

SCORE 620 TO 679

FHA or conventional

Conventional loans become available, but mortgage insurance and pricing adjustments are high at these scores, so FHA is often cheaper. USDA loans may be possible in eligible areas.

Program rules come from FHA, VA, USDA, Fannie Mae and Freddie Mac, but each lender can add its own stricter requirements, called overlays. Two lenders can give opposite answers to the same application, so a “no” from one is not the final word. Compare programs and costs in our guide to the best lenders for first-time buyers, which includes a program calculator, and read the full FHA loan requirements.

After bankruptcy or foreclosure

A past bankruptcy or foreclosure does not rule you out forever, but there are usually waiting periods before you can get a new mortgage. These are the general rules; exceptions can apply for documented extenuating circumstances.

FHA: generally 2 years after a Chapter 7 discharge, 12 months of on-time Chapter 13 plan payments with court approval, and 3 years after a foreclosure.
Conventional (Fannie Mae): generally 4 years after a Chapter 7 discharge, 2 years after a Chapter 13 discharge and 7 years after a foreclosure.

Lenders will also want to see clean payment history since the event, so the time between now and the end of your waiting period is the best moment to rebuild your credit.

Raise your score before you apply

Even a modest increase can move you into a cheaper pricing tier or open up conventional loans. How much of your card limits you use, called utilization, is one of the factors you can change fastest, because it is recalculated every time your balances are reported.

Credit card utilization planner

How much of your card limits you use is one of the fastest things you can change before applying. Enter your cards to see how much to pay down.

Card 1 balance ($)Card 1 limit ($)

Card 2 balance ($)Card 2 limit ($)

Card 3 balance ($)Card 3 limit ($)

Card 4 balance ($)Card 4 limit ($)

Scoring models look at both overall utilization and each card. Balances are usually reported on your statement date, so paying before that date lowers the balance lenders see. General guidance only, not credit or financial advice.

In the default example, $4,600 of balances on $12,000 of limits is 38% utilization, and one card is at 70% of its limit. Paying down about $1,000 brings the total under 30%, and about $3,400 brings it under 10%. A practical 90-day plan:

Get your free credit reports from all three bureaus at AnnualCreditReport.com and dispute any errors, such as accounts that are not yours or late payments that were made on time.
Pay every bill on time from now on. Payment history is the biggest part of most scores, and recent late payments hurt most.
Pay card balances down before the statement date, using the planner above as your target.
Avoid new credit applications and keep old accounts open, as both affect your score.
Apply with several lenders within a short window. Multiple mortgage credit checks within a short period are normally counted as one inquiry.

Warning signs to watch for

Guaranteed approval regardless of credit. Legitimate lenders must check that you can repay.
Credit repair companies that want payment upfront. Under federal law they cannot charge you until they have performed the services they promised, and they cannot remove accurate negative information.
Loans with very high fees, large balloon payments or prepayment penalties presented as your only option. Compare at least one FHA quote first.
Pressure to inflate your income or hide debts. That is mortgage fraud and puts you at serious risk.

Frequently asked questions

What is the lowest credit score for a mortgage?

FHA rules allow scores down to 500 with 10% down, but few lenders go that low. Non-QM lenders may consider lower scores or recent credit events, at higher rates. Fannie Mae removed its fixed 620 minimum for loans run through its automated system in November 2025, but most lenders still require 620 for conventional loans.

Is it better to buy now with bad credit or wait?

If the payment is affordable now and you plan to stay for years, buying with an FHA loan and refinancing later once your credit improves can work. But refinancing is never guaranteed, and a higher rate costs you every month. If a few months of work could move your score up a tier, waiting is often cheaper. Our affordability guide helps you check the payment.

Does a co-borrower help?

A co-borrower’s income can help, but lenders often use the lower of the borrowers’ credit scores, and both of you are fully responsible for the loan. Think carefully before asking a family member to co-sign.

Sources

This guide is for informational purposes only and is not financial or credit advice. Program rules and waiting periods can change and have exceptions, and lenders may apply stricter requirements. Speak to a licensed lender or a HUD-approved housing counselor about your situation.

Best Mortgage Lenders for Bad Credit: Your Options by Credit Score