Finding the best mortgage lenders for bad credit can feel impossible when banks keep saying no. The good news is that a low credit score doesn’t automatically shut you out of homeownership. Several lenders work with borrowers who have scores in the 500s, past bankruptcies or thin credit histories, especially through government-backed loans like FHA and VA. In this guide, we explain which lenders are worth comparing, what loans are available and how to improve your chances of approval.
What Counts as Bad Credit for a Mortgage?
Before looking at the best mortgage lenders for bad credit, it’s important to know where you stand. Most lenders use FICO scores, which range from 300 to 850. In general:
| FICO score | Rating |
|---|---|
| 300–579 | Poor |
| 580–669 | Fair |
| 670–739 | Good |
| 740 and above | Very good to excellent |
For mortgages, a score below 620 is usually considered bad credit, because that’s the typical minimum for a conventional loan. Below 580, your options become more limited, but they don’t disappear.
Which Loans Can You Get With Bad Credit?
Before comparing the best mortgage lenders for bad credit, it helps to know which loan types accept lower scores:
- FHA loans: the most common option. You can put 3.5% down with a 580 score, or 10% down with a score between 500 and 579. Many lenders set their own minimum above 500.
- VA loans: for eligible veterans and service members. The VA doesn’t set a minimum score, although many lenders ask for around 620.
- USDA loans: for eligible rural and suburban areas, with no down payment. Many lenders look for a score around 640.
- Conventional loans: usually require at least 620.
- Non-QM loans: private loans that don’t follow standard rules. They can help after a bankruptcy or foreclosure, but they normally come with higher rates and larger down payments.
How We Chose These Lenders
To build this list of the best mortgage lenders for bad credit, we looked at three things: the minimum credit score each lender publicly accepts, the variety of loan options for borrowers with credit problems, and extra help such as down payment assistance or flexible documentation. We don’t receive payment from any of the lenders mentioned. Minimum scores were checked in October 2026 and can change, so always confirm them directly with the lender.
Best Mortgage Lenders for Bad Credit in 2026
| Lender | Minimum credit score | Best for |
|---|---|---|
| Carrington Mortgage Services | 500 (FHA) | Very low scores and past bankruptcies |
| CrossCountry Mortgage | 500 (FHA) | Down payment and closing cost help |
| Guild Mortgage | 540 (FHA with 10% down) | Self-employed and non-traditional income |
| Rate | 580 (FHA); some 500 scores with 10% down | Fast online process |
| New American Funding | No fixed FHA minimum advertised | Flexible underwriting and non-QM loans |
| Veterans United | Case by case (VA) | Veterans with low credit |
1. Carrington Mortgage Services
Carrington is one of the best mortgage lenders for bad credit because it openly works with FHA borrowers with scores as low as 500. It also offers non-QM loans through its Flexible Advantage program, which can be an option if you have a past bankruptcy, foreclosure or short sale in your history.
Pros: accepts very low scores, considers past credit events, offers FHA, VA and non-QM loans.
Cons: rates on non-QM loans are higher, and you’ll need a larger down payment with a score under 580.
2. CrossCountry Mortgage
CrossCountry is another of the best mortgage lenders for bad credit, with FHA scores accepted starting at 500. What makes it stand out is its assistance programs, such as Smart Start for down payment help and Community Promise for closing costs, which can make a big difference if your savings are limited.
Pros: low minimum score, down payment and closing cost assistance, large network of loan officers.
Cons: assistance programs have eligibility rules that vary by area.
3. Guild Mortgage
Guild accepts FHA borrowers with a score of 540 if they put 10% down, or 580 with 3.5% down. It’s a strong choice if your income is hard to document, because it offers bank statement, 1099 and profit-and-loss loans for self-employed borrowers. Guild also gives access to hundreds of down payment assistance programs.
Pros: options for non-traditional income, wide access to assistance programs, zero and low down payment options.
Cons: you need 10% down if your score is below 580.
4. Rate
Rate (formerly Guaranteed Rate) accepts FHA scores of 580 with 3.5% down, and in some cases 500 with 10% down. Its online process is fast, with full underwriting approval in as little as one business day. Its OneDown program can help eligible lower-income buyers get into a home with just 1% down.
Pros: quick online approval, low down payment programs, wide range of loan types.
Cons: approval below 580 is not guaranteed and depends on your full profile.
5. New American Funding
New American Funding doesn’t advertise a fixed minimum score for FHA loans and is known for reviewing each application with flexibility. It also offers non-QM loans and down payment or closing cost assistance for eligible first-time buyers.
Pros: flexible underwriting, non-QM options, assistance for first-time buyers.
Cons: without a published minimum, you’ll only know where you stand after you apply.
6. Veterans United
If you are an eligible veteran or service member, Veterans United is one of the best mortgage lenders for bad credit to consider. It focuses on VA loans and reviews each application individually, so it may approve borrowers below the 620 score many other VA lenders require.
Pros: VA loan specialist, case-by-case review, no down payment with a VA loan.
Cons: mainly useful for military borrowers.
What Bad Credit Really Costs You
Getting approved by one of the best mortgage lenders for bad credit is only the first step. With a lower score, you’ll usually pay a higher interest rate, and over 30 years that adds up.
For example, on a $300,000 30-year fixed loan, a 6.25% rate means a monthly payment of about $1,847. At 7.25%, the payment rises to about $2,047. That’s around $200 more per month and roughly $72,000 more in interest over the life of the loan. These are example rates; your actual offer will depend on your full profile and the market.
That’s why comparing the best mortgage lenders for bad credit is so important: even a small difference in rate can save you thousands.
How to Get Approved With Bad Credit
Even with the best mortgage lenders for bad credit, these steps can improve your chances and help you get a better rate:
- Check your credit reports. You can get free reports from the three bureaus and dispute any errors you find.
- Pay down credit card balances. Lowering your credit utilization is one of the fastest ways to raise your score.
- Avoid new credit. Don’t open new cards or loans in the months before you apply.
- Save a bigger down payment. Putting 10% down can open doors with a score under 580.
- Look for down payment assistance. Many state and local programs work alongside FHA loans.
- Compare at least three lenders. Compare the official Loan Estimates side by side, not just the advertised rates.
- Consider waiting a few months. If your score is close to a threshold like 580 or 620, a short wait can mean a better rate.
Red Flags to Watch Out For
When you have bad credit, you can be a target for bad offers. Be careful with any lender that:
- Guarantees approval before reviewing your finances
- Asks for large upfront fees before you get a Loan Estimate
- Pressures you to sign quickly or to lie on your application
- Pushes you toward a loan with a payment you can’t afford
Legitimate lenders, including the best mortgage lenders for bad credit, will always review your income, debts and credit before making an offer.
A Personal Note
When I started researching the best mortgage lenders for bad credit, I assumed a score in the 500s would close almost every door. What I found is that it closes some, but not all, and that the real difference is in the cost. Two people can buy the same house and one can pay tens of thousands of dollars more just because of a lower score. That’s why, if you’re not in a rush, I believe working on your credit for a few months before applying can be one of the most profitable financial decisions you make.
— José María, Finanzasclave
Final Thoughts
A low credit score makes buying a home harder, but not impossible. FHA loans, VA loans and lenders like Carrington, CrossCountry, Guild, Rate, New American Funding and Veterans United give borrowers with bad credit real options. The key is to compare several of the best mortgage lenders for bad credit, understand the full cost of each offer and, when possible, improve your score before you apply.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. We are not a lender or financial advisor and are not affiliated with any lender mentioned. Credit score requirements and programs can change; they were checked in October 2026. Always confirm details directly with the lender and consult a licensed mortgage professional before making any decision.