You can get a mortgage with bad or poor credit, but there is no single credit score that determines whether every borrower qualifies.
FHA, VA, USDA and conventional mortgages all evaluate credit differently. Your payment history, income, debts, down payment, cash reserves and recent events such as bankruptcy or foreclosure can also affect the lender's decision.
Some borrowers who do not meet agency guidelines may also consider portfolio or non-QM financing, although requirements and costs vary considerably by lender and product.
Bad Credit Mortgage Options Basics
| Mortgage Option |
Credit Score Context |
Down Payment |
Other Key Considerations |
| FHA loan |
FHA permits maximum financing with a minimum decision credit score of at least 580. Scores from 500 through 579 are limited to 90% LTV. |
As little as 3.5% with an eligible score of at least 580. At least 10% is generally required with scores from 500 through 579. |
FHA mortgage insurance applies. Lenders can use stricter credit requirements. |
| VA loan |
VA does not establish a universal minimum credit score, although lenders can set their own requirements. |
VA generally does not require a down payment for an eligible purchase when applicable requirements are met. |
You must meet VA eligibility, credit, income, residual-income and occupancy requirements. |
| USDA loan |
USDA does not use one universal minimum score for every guaranteed loan. Credit treatment depends partly on GUS or manual underwriting. |
Eligible borrowers can receive 100% financing. |
Household income, property location, occupancy and credit requirements apply. |
| Conventional loan |
Fannie Mae manual underwriting uses minimum scores, while DU has no fixed minimum. Freddie Mac also distinguishes automated underwriting from product-specific and manual score requirements. |
As little as 3% for certain eligible conventional purchase loans. |
Approval, pricing and private mortgage insurance can become less favorable as credit risk increases. |
| Portfolio or non-QM loan |
Varies by lender and product. |
Varies by lender and product. |
May use different underwriting or income-documentation methods and can carry higher costs or larger cash requirements. |
What Counts as Bad Credit for a Mortgage?
"Bad credit" or "poor credit" is not a formal mortgage category. A lender evaluates both your credit score and the information behind it.
That can include late payments, collections, charge-offs, utilization, the length of your credit history and major derogatory events such as bankruptcy or foreclosure.
A lower score can limit your options, but two borrowers with the same score can still receive different underwriting results. One may have recent late payments and substantial debt, while another may have several months of on-time payments, stable income and substantial savings.
There is also no single score requirement across all mortgage programs. Comparing credit score requirements by loan type provides a better starting point than treating one number as the cutoff for homeownership.
FHA Loans for Borrowers With Bad Credit
FHA financing can provide a path to a mortgage for borrowers whose scores fall below common conventional underwriting thresholds.
Under HUD's FHA requirements, borrowers with a minimum decision credit score of at least 580 are eligible for maximum financing. For a standard FHA purchase, maximum financing generally means up to 96.5% LTV, or a minimum 3.5% investment.
A score from 500 through 579 limits the mortgage to 90% LTV, which generally requires at least 10% down. A borrower with a minimum decision credit score below 500 is not eligible for FHA-insured financing under the standard score rules.
Those are FHA program limits, not guaranteed-approval thresholds. A lender can impose stricter requirements, and the borrower still has to meet applicable income, debt, property and underwriting standards.
There is therefore no such thing as an FHA loan with guaranteed approval solely because you meet a particular credit score.
FHA May Work Well If
- Your score falls below common conventional thresholds.
- You meet FHA's applicable down payment and credit requirements.
- Your current income can support the proposed mortgage and other debts.
- Your recent credit history shows improvement after earlier problems.
Credit is only one part of qualification. FHA borrowers also need to meet the program's broader qualification requirements, including applicable debt-to-income requirements.
VA Loans for Eligible Borrowers With Credit Challenges
VA does not establish a universal minimum credit score for VA-backed home loans.
The Department of Veterans Affairs requires borrowers to have satisfactory credit and sufficient income. Individual lenders can set their own credit-score requirements.
VA underwriting also evaluates residual income, debts and the borrower's overall ability to repay. A low score therefore does not automatically prevent approval, but the absence of a VA minimum score does not guarantee approval either.
The borrower must also meet VA eligibility requirements, generally based on qualifying military service or another eligible status.
VA May Work Well If
- You meet VA eligibility requirements.
- Your lender accepts your current credit profile.
- You have limited funds available for a down payment.
- Your income and residual income meet applicable underwriting requirements.
Lender standards can vary even though VA itself does not establish a score floor. The VA loan credit score requirements explain the distinction between VA program rules and lender overlays in more detail.
USDA Loans for Eligible Rural Buyers With Lower Credit
USDA guaranteed loans can provide 100% financing to eligible low- and moderate-income households buying qualifying primary residences in eligible rural areas.
USDA does not use one universal minimum credit score across every guaranteed loan.
Under USDA Handbook HB-1-3555, the Guaranteed Underwriting System, or GUS, determines the acceptable credit score used for its underwriting recommendation. Manually underwritten and referred loans have separate credit-validation requirements.
Lenders must also evaluate whether the applicant's credit history demonstrates an ability and willingness to repay. Individual lenders can apply additional underwriting standards.
USDA May Work Well If
- You are purchasing an eligible primary residence in a USDA-eligible area.
- Your household income falls within applicable program limits.
- You have limited down payment savings.
- Your credit history and complete application meet USDA and lender requirements.
Conventional Loans With Fair or Lower Credit
Many conventional loans are underwritten to Fannie Mae or Freddie Mac standards, but the two GSEs should not be treated as one rulebook.
Fannie Mae Credit Requirements
Under the current Fannie Mae Selling Guide, manually underwritten fixed-rate mortgages generally require a minimum credit score of 620. Manually underwritten ARMs generally require 640.
Fannie Mae does not set a fixed minimum credit score for casefiles underwritten through Desktop Underwriter, or DU. DU assesses the borrower's creditworthiness using the complete risk profile.
Freddie Mac Credit Requirements
Freddie Mac also distinguishes automated underwriting from mortgages subject to manual or product-specific score requirements.
For most mortgages receiving an Accept risk class through Loan Product Advisor, a minimum Indicator Score is not required unless another Freddie Mac requirement establishes one. Certain manually underwritten mortgages and specific products or transaction types do have minimum Indicator Scores.
That means there is not one universal Freddie Mac credit-score floor that applies to every conventional mortgage.
Conventional May Work Well If
- Your overall credit profile receives an acceptable automated underwriting result or meets applicable manual requirements.
- You have manageable debts and documented income.
- You have enough funds for the required down payment and closing costs.
- The combination of conventional pricing and mortgage insurance compares favorably with other programs available to you.
A lower score can affect conventional pricing and mortgage insurance even when the loan is eligible. The credit score needed for a conventional loan depends partly on the GSE, underwriting method and transaction.
Portfolio and Non-QM Loans With Bad Credit
Portfolio and non-qualified mortgage, or non-QM, loans do not follow one FHA, VA, USDA, Fannie Mae or Freddie Mac underwriting standard.
Some lenders may consider borrowers with recent credit events or financial circumstances that do not fit agency underwriting. Certain non-QM products can also use alternative income documentation, depending on the product.
Requirements vary significantly. A non-QM or portfolio loan may require a larger down payment, additional reserves, higher fees or different pricing than an agency mortgage.
Recent bankruptcy or foreclosure can also make standard agency financing temporarily unavailable even if the borrower's current score has recovered. Private programs may use different seasoning requirements.
What Do Bad Credit Mortgage Lenders Look For?
Mortgage lenders do not evaluate a low credit score in isolation. They look at the complete application and apply both the loan program's requirements and their own underwriting standards.
Lender Overlays vs. Agency Minimums
An agency minimum establishes what the program may permit. It does not require every lender to approve loans at that limit.
For example, FHA permits borrowers with minimum decision credit scores from 500 through 579 to finance up to 90% of the property's value. A lender can still establish a higher minimum score as an overlay.
The same distinction applies to VA. VA itself does not establish a minimum score, but an individual VA lender may.
Other Factors That Can Strengthen an Application
Depending on the mortgage program and underwriting method, lenders may consider factors such as:
- Stable and adequately documented income
- A manageable debt-to-income ratio
- Cash reserves remaining after closing
- A larger down payment or lower loan-to-value ratio
- A recent history of making payments on time
- Limited new debt or credit inquiries
These factors do not erase a program requirement or guarantee approval. Their treatment varies by loan program and underwriting method.
How to Compare Mortgage Lenders With Bad Credit
Two lenders can evaluate the same borrower differently because their overlays, loan programs and pricing can differ.
When comparing lenders, ask which loan programs they offer, whether they apply minimum scores above the agency requirements, whether manual underwriting is available when permitted and how the credit profile affects fees or mortgage insurance.
Compare actual loan terms rather than assuming a company that advertises loans for low credit scores will provide the lowest-cost or most suitable mortgage.
How to Compare Mortgage Options With Bad Credit
| What to Compare |
Why It Matters |
| Credit requirements |
Program rules, automated underwriting and lender overlays can produce different eligibility results. |
| Down payment |
A lower score can increase the required down payment under some programs, including FHA. |
| Monthly payment |
Interest, mortgage insurance, property taxes and homeowners insurance all affect affordability. |
| Mortgage insurance and program fees |
FHA, conventional, VA and USDA financing use different insurance and fee structures. |
| Recent credit history |
Late payments, collections and major derogatory events can affect underwriting beyond the score itself. |
| Debt-to-income ratio |
High monthly debt can limit qualification even when your credit meets the applicable standard. |
| Lender overlays |
A lender can impose requirements beyond an agency's published minimums. |
Credit and debt should be evaluated together. Compare DTI limits by loan type when determining whether your existing monthly obligations could restrict your mortgage options.
Example: How Two Credit Profiles Can Produce Different Options
Consider two hypothetical borrowers with the same income and manageable monthly debts.
Borrower A has a 560 minimum decision credit score and 10% available for a down payment. FHA's published score and LTV rules may permit 90% financing at that score, but the borrower would still need to satisfy the lender's requirements and the rest of FHA underwriting.
Borrower B has a 620 score and 5% available for a down payment. That score meets Fannie Mae's general minimum for a manually underwritten fixed-rate mortgage, and an automated conventional application could also be evaluated through DU or Freddie Mac's Loan Product Advisor.
That does not mean Borrower B will automatically receive a conventional approval or that Borrower A will automatically receive FHA financing. Income, DTI, payment history, assets, property details and lender standards still affect both applications.
Ways to Improve Your Mortgage Options Before Applying
If poor credit is restricting your mortgage choices, improving the complete credit profile may expand the loans and pricing available to you.
Pay Down Revolving Balances
Reducing credit card balances can lower utilization and can also reduce the monthly debt used in mortgage qualification.
Bring Past-Due Accounts Current
Recent payment history can affect underwriting even when the numerical score meets a program requirement. Avoid adding new late payments while preparing for a mortgage.
Check Your Credit Reports for Errors
Review the information being reported by Equifax, Experian and TransUnion. You can obtain official credit reports through AnnualCreditReport.com.
If information is inaccurate, dispute it with the credit reporting company and the business that furnished the information.
Avoid New Debt Before Applying
A new auto loan, personal loan or credit card can change both your credit profile and your debt-to-income ratio.
Build a Larger Down Payment or Cash Reserves
Additional savings can reduce the amount borrowed and leave more funds available after closing. Whether reserves or a larger down payment affect underwriting depends on the mortgage program and transaction.
A larger down payment is not always required, so compare the effect of using more cash upfront with keeping savings available after closing.
Account for Major Credit Events
Bankruptcy and foreclosure can carry program-specific waiting periods even after your credit score improves. The applicable timeline depends on the event, mortgage program, discharge or completion date and any permitted exceptions.
Bottom Line
You can get a mortgage with bad credit, but no single loan program or credit score guarantees approval.
FHA, VA, USDA, Fannie Mae and Freddie Mac use different approaches to credit, and lenders can impose requirements beyond agency minimums. Compare the complete loan, including down payment, mortgage insurance, fees, monthly payment and lender underwriting, rather than focusing only on the lowest score a program may allow.
Frequently Asked Questions
Can I Get a Mortgage With Bad Credit?
Possibly. Mortgage approval depends on your credit history along with income, debts, assets, down payment, property and loan program. FHA, VA, USDA, conventional and certain non-QM loans can all have different credit requirements.
What Is the Best Mortgage for Bad Credit?
There is no single mortgage that is best for every borrower with bad credit. FHA can permit lower scores under its published rules, VA has no VA-established minimum score for eligible borrowers and USDA uses its own credit analysis. Conventional and non-QM options depend on the complete application and underwriting method.
Can I Buy a House With a 500 Credit Score?
FHA permits a minimum decision credit score from 500 through 579 with a maximum 90% LTV, which generally requires at least 10% down. Meeting the FHA minimum does not guarantee that a lender will approve the loan, and lenders can require a higher score.
Can I Buy a House With a 580 Credit Score?
Potentially. FHA borrowers with a minimum decision credit score of at least 580 are eligible for maximum financing under HUD's credit-score rules. Income, debts, credit history, property eligibility and lender requirements still determine whether the mortgage is approved.
Does the VA Have a Minimum Credit Score?
No. VA does not establish a universal minimum credit score for VA-backed home loans. Individual lenders may set minimum scores, and borrowers still must have satisfactory credit, sufficient income and meet the other applicable VA and lender requirements.
Can I Get a USDA Loan With Bad Credit?
Potentially. USDA does not use one universal minimum score for every guaranteed mortgage. GUS determines acceptable credit for automated underwriting, while manual and referred files have separate credit requirements. The borrower must also meet USDA income, property and occupancy rules.
Can I Get a Mortgage With Bad Credit History?
Possibly. Lenders evaluate the events behind the score, including recent late payments, collections, bankruptcy and foreclosure. Some major credit events have mortgage-program waiting periods, while other credit problems are evaluated as part of the overall underwriting decision.
Are There Bad Credit Mortgage Loans With Guaranteed Approval?
No mortgage program guarantees approval based solely on a credit score. Even when you meet a published agency minimum, the lender still evaluates income, debts, assets, credit history, the property and other underwriting requirements.
Can I Get a Mortgage With Poor Credit and a Low Down Payment?
Potentially. FHA allows a 3.5% minimum investment for borrowers meeting its 580-or-higher score requirement for maximum financing. Eligible VA and USDA borrowers may qualify without a down payment, although each program has separate eligibility and underwriting requirements.
Is Conventional or FHA Better for Bad Credit?
The comparison depends on the borrower. FHA permits scores below common conventional manual-underwriting thresholds, while conventional loans use different mortgage insurance and pricing structures. Compare the actual costs and eligibility under both programs rather than choosing based only on the credit score requirement.
Should I Improve My Credit Before Applying for a Mortgage?
It can make sense when a higher score or stronger recent credit history would expand your loan options or improve pricing. Whether waiting is worthwhile depends on how close you are to qualifying, the changes you can realistically make and your homebuying timeline.
.jpg?quality=80&width=150)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
.jpg?quality=80&width=800)
