Can You Get a Mortgage With Bad Credit? Yes, Here Is How

Homeownership can feel out of reach when your credit score sits below 620, but the answer to “can you get mortgage with bad credit” is a qualified yes. Lenders have created multiple pathways for borrowers with damaged credit, from government-backed loans to private programs that weigh income more heavily than credit history. The real challenge is not finding a lender, it is avoiding predatory terms and building a strategy to qualify at a rate you can afford.

In this guide, you will learn the minimum credit requirements for each loan type, how to improve your chances before applying, and why comparing multiple lender offers matters when your credit is not perfect. You will also see how a platform like Express Mortgage Quotes can connect you with verified lenders who specialize in this niche.

What Credit Score Do You Need for a Mortgage?

Your credit score is a snapshot of your borrowing history, and every mortgage program sets its own minimum. The three main categories are conventional loans, FHA loans, and VA loans. Each has different rules, and knowing them can save you from wasting time on applications that will be denied.

For a conventional loan, which is the most common type, most lenders require a minimum score of 620. However, some lenders offer conventional loans with scores as low as 580 if you put down at least 5% (though this is rare). FHA loans, backed by the Federal Housing Administration, are more flexible: you can qualify with a score of 580 and a 3.5% down payment, or with a score as low as 500 if you can put down 10%. VA loans, available to veterans and active service members, have no official minimum score, but many lenders look for at least 600.

If your score is below these thresholds, you still have options. Some non-qualified mortgages (non-QM) and portfolio loans, which lenders keep on their own books, may accept scores in the 500s if you have compensating factors like a large down payment, substantial cash reserves, or a strong income history.

How Bad Credit Affects Your Mortgage Terms

Qualifying for a mortgage with bad credit is only half the battle. The bigger issue is how much it costs you. Lenders use your credit score to set your interest rate, and a lower score translates into a higher rate because you look riskier. Over a 30-year loan, even a 1% difference in rate can add tens of thousands of dollars in interest.

For example, consider a $250,000 home loan. A borrower with a 740 score might get a rate of 6.5%, while a borrower with a 620 score might be quoted 7.5%. That single point of difference raises the monthly payment by roughly $170, and the total interest over the life of the loan by over $60,000. This is why you should not simply accept the first offer you receive.

In addition to higher rates, bad credit often triggers higher private mortgage insurance (PMI) premiums on conventional loans and higher mortgage insurance premiums (MIP) on FHA loans. Some lenders also add origination points or require a larger down payment to offset their risk. The good news is that these costs are not set in stone; you can negotiate or shop around to find a lender willing to offer better terms.

How to Improve Your Chances of Approval

Even if your credit is not perfect, you can take several steps to make your application more attractive to lenders. The key is to show that your past credit problems are not a reliable predictor of future behavior, and that you have the income and stability to handle a mortgage payment.

Here are five practical actions to strengthen your mortgage application:

• Pull your credit reports and dispute any errors. A 2021 Consumer Financial Protection Bureau study found that one in five consumers had an error on at least one report, and correcting those can boost your score.
• Pay down revolving balances, especially on credit cards. Aim to keep your credit utilization below 30% of your available credit, as this is a major factor in your score.
• Make all payments on time for at least 12 months before applying. Payment history is the biggest component of your credit score.
• Save for a larger down payment. A 10% or 20% down payment reduces the lender’s risk and can make you eligible for better rates.
• Add a co-borrower with good credit. This can lower the perceived risk and help you qualify for a lower rate.

Each of these actions addresses a specific area that lenders evaluate. Disputing errors can remove negative items that drag your score down. Paying down balances improves your utilization ratio, which can produce a quick score increase. A consistent payment history shows that you have moved past financial difficulties. A larger down payment means you have less to borrow, which reduces the lender’s exposure. And a co-borrower with strong credit can effectively neutralize the impact of your bad credit.

Beyond these steps, consider waiting a few months if your credit score is very close to a cutoff. For example, if you are at 575 and need 580 for an FHA loan, a small effort could push you over the line.

Loan Programs Specifically for Bad Credit Borrowers

If your credit score is below 620, you should focus on loans that are designed for lower credit tiers. These programs have more lenient underwriting standards and can be your fastest route to homeownership.

FHA loans are the most popular choice for bad credit borrowers. They allow scores as low as 500, require a down payment of only 3.5% for scores above 580, and have relaxed debt-to-income ratios. The catch is that you will pay an upfront mortgage insurance premium (currently 1.75% of the loan amount) and an annual MIP that lasts for the life of the loan if you put less than 10% down.

VA loans are another excellent option for eligible veterans. They offer 100% financing (no down payment), no monthly mortgage insurance, and more forgiving credit guidelines. If you are a veteran with bad credit, this is often the best deal available, but you will need to find a lender that does not overlay a strict minimum score.

USDA loans, for rural homebuyers, also allow low credit scores (often 640 or lower with compensating factors) and offer 100% financing. However, they are limited to properties in designated rural areas and have income caps. Finally, some state and local housing finance agencies offer first-time homebuyer programs that accept credit scores in the 580-620 range with favorable terms.

For those who do not qualify for government programs, non-QM loans and bank portfolio loans are worth exploring. These are not subject to the same borrower protections, but they can be a lifeline if you have a steady income and a compelling story. Expect to pay a higher rate and a larger down payment (often 20% or more) with these options.

How to Get a Mortgage Quote With Bad Credit

Once you have assessed your credit and chosen a loan type, the next step is to get quotes from multiple lenders. This is critical because rates and fees vary widely, and the difference between a good and a bad offer can cost you thousands of dollars each year. Many borrowers make the mistake of applying to only one lender, and they end up paying more than necessary.

To compare effectively, apply for pre-approval with at least three different lenders. You can do this directly with banks, credit unions, or online mortgage companies. Each will pull your credit and issue a Loan Estimate, which itemizes your interest rate, closing costs, and monthly payment. Review these documents side by side and ask lenders to match or beat the best offer you receive.

If you are not sure where to start, a platform like Express Mortgage Quotes can simplify the process. This service lets you submit one inquiry and receive quotes from multiple verified lenders who specialize in your credit profile. It is a way to compare offers without visiting dozens of websites. Their educational guides, including this detailed explanation of bad credit mortgage options, can help you understand which program fits your situation before you commit.

When you receive quotes, pay attention to the annual percentage rate (APR), which includes fees and points, not just the interest rate. A lender with a slightly higher rate but lower closing costs could be a better deal over the short term. Also, ask about any prepayment penalties or adjustable-rate features that could cause your payment to rise later.

For a broader look at the market, you can also read our roundup of the best mortgage lenders for bad credit. That guide reviews top companies based on credit requirements, fees, and customer service, which can save you hours of research.

Steps to Apply for a Mortgage With Bad Credit

Applying for a mortgage when your credit is less than perfect requires a slightly different approach than a borrower with good credit. You need to be proactive about documenting your finances and explaining any past credit events. Here is a step-by-step process to follow:

1. Check your credit score and pull your reports from all three bureaus (Equifax, Experian, and TransUnion). Review for errors and dispute them if you find any.
2. Save for a down payment and closing costs. For an FHA loan, you will need at least 3.5% down, plus 2-5% for closing costs. Automate your savings to build this fund consistently.
3. Gather your documents: pay stubs, tax returns, bank statements, and proof of any additional income. Lenders want to see stability, so have two years of employment history ready.
4. Get pre-approved by a lender that works with bad credit borrowers. This will give you a clear idea of what you can afford and shows sellers that you are serious.
5. Compare offers from at least three lenders, using the Loan Estimates to compare rates, fees, and monthly payments.
6. Submit your chosen application and respond quickly to any requests for additional documentation. The faster you provide what the lender asks for, the smoother the process will be.

Each step is designed to reduce risk in the lender’s eyes. Checking your credit first allows you to fix errors that could unfairly lower your score. Saving a larger down payment gives you more equity and signals that you are financially committed. Pre-approval helps you avoid falling in love with a home that you cannot get financing for. And comparing offers ensures that you are not paying an inflated rate because you did not shop around.

What to Do When Your Application Is Denied

Even with all the right preparation, a denial is possible, especially if your credit score is very low or you have a recent bankruptcy or foreclosure. If this happens, do not give up. Request a written explanation from the lender, which is required by law under the Equal Credit Opportunity Act. This letter will tell you the exact reasons for the denial, such as a low score, high debt-to-income ratio, or insufficient down payment.

Use that information to create a plan. If your score is too low, focus on the credit-building tips above for six to twelve months. If your debt-to-income ratio is too high, pay down existing debts or find a co-signer. If the issue is a recent major credit event, you may need to wait the required seasoning period: two years after a bankruptcy discharge or four to seven years after a foreclosure, depending on the loan program.

In the meantime, consider working with a HUD-approved housing counselor. They can help you create a budget, improve your credit, and navigate the home buying process free of charge. You can also explore rent-to-own agreements or lease options as a temporary path to homeownership while you rebuild your credit.

Final Thoughts

So, can you get mortgage with bad credit? Yes, but the terms will likely be less favorable than what a borrower with good credit receives. The key is to prepare thoroughly, choose the right loan program, and compare offers from multiple lenders. By improving your credit score, saving a larger down payment, and demonstrating financial stability, you can offset the risk your credit history presents.

Start today by pulling your credit reports and checking your score. Then, use the resources available through Express Mortgage Quotes to get quotes from verified lenders who understand your situation. With patience and persistence, homeownership is within your reach, even with a less-than-perfect credit history.