YOUR NEXT MORTGAGE DECISION

Getting a mortgage with bad credit: your real options

A lower credit score does not automatically rule out a mortgage. FHA purchase loans may allow 500–579 with at least 10% down, or 580 and above with as little as 3.5% down. VA does not set a minimum score, but lenders set their own requirements. Income, debts, payment history, property eligibility and lender review still matter. A score alone is not an approval.

Written by Enrique Pelayo Jr., NMLS #131435 · Updated September 27, 2026
Educational information, not a loan offer or approval.

Explore private quote options →Use the comparison worksheet

What counts as “bad credit” for a mortgage?

There is no universal cutoff. The score a lender uses can differ from a free consumer score, and underwriting considers more than the number. Use these bands to organize questions, not to predict approval.

Credit-score bands: starting points for a lender discussion
Score range	What to discuss	What the number does not establish
Below 500	Review credit reports and work on a sustainable rebuilding plan.	That a high-cost alternative loan is suitable or affordable.
500–579	Ask whether a lender offers FHA purchase financing at 90% maximum loan-to-value.	That the lender accepts this score or that 10% down covers closing costs.
580–619	Ask about FHA and, if eligible, VA or USDA requirements.	Approval, a particular rate or access to every program.
620–679	Compare program and lender requirements, including the underwriting method.	That all conventional loans require 620 or all programs are available.
680 and above	Keep comparing prices, fees and mortgage insurance.	Automatic approval or the best available pricing.

Credit-report checkup →Estimate your debt-to-income ratio →

FHA loans: lower-score purchase options

HUD’s FHA guidance allows a maximum 90% loan-to-value ratio at scores of 500–579. At 580 or above, eligible purchase borrowers may qualify for maximum financing, generally as little as 3.5% down. These are program thresholds, not a promise that a lender will accept the file.

FHA financing includes upfront and ongoing mortgage insurance. Ask about the lender’s credit overlays, recent late payments, collections, debt-to-income requirements and the complete cash needed at closing.

HUD: FHA credit-score requirements →Plan down payment, costs and reserves →

VA loans: eligibility and lender review

Eligible veterans, service members and surviving spouses may have access to VA-backed purchase loans. VA does not prescribe a minimum credit score; the lender evaluates credit and income and may set a score requirement.

Many eligible borrowers can buy without a down payment, subject to entitlement, appraisal and lender requirements. VA purchase loans have no monthly mortgage insurance, but a funding fee may apply unless you are exempt. Check your Certificate of Eligibility and the costs for your situation.

VA: purchase-loan eligibility and benefits →VA: credit requirements and lender differences →

USDA loans: location, income and credit history

USDA’s Single Family Housing Guaranteed Loan Program does not set a program-wide credit-score minimum. It requires a willingness and ability to manage debt, along with eligible household income and an eligible property location.

The lender and underwriting findings determine what documentation and credit standards apply. Do not treat 640 as a universal approval threshold or assume that a lower score will be accepted.

USDA: Guaranteed Loan Program requirements →

Conventional loans: the underwriting method matters

It is no longer accurate to say every conventional mortgage requires a 620 score. Fannie Mae’s current guide sets no minimum score for Desktop Underwriter (DU) casefiles; the system assesses the credit history and other risk factors. This does not mean the file will be approved.

Fannie Mae’s manually underwritten loans generally have minimums of 620 for fixed-rate loans and 640 for adjustable-rate loans, with specified exceptions and additional requirements. Other agency, product, insurer and lender rules can differ. Ask which standards apply to the quote you receive.

Fannie Mae: current credit-score requirements →

Non-QM loans: examine the full terms

Non-qualified mortgage products can use different documentation or underwriting approaches. The label does not mean a lender will ignore poor credit or affordability. Ask about the rate, down payment, fees, any prepayment penalty and how the payment could change.

Compare written alternatives and consider whether improving your file first would make a more sustainable loan possible. Avoid choosing a loan solely because an advertisement says you can qualify.

Questions about loan programs →

How to get a mortgage with bad credit: step by step

Check all three credit reports
Use AnnualCreditReport.com and review account details, balances and payment history. Dispute information you believe is inaccurate with the reporting company and information provider.
Get your credit reports →
Build a payment and balance plan
Prioritize on-time payments and manageable revolving balances. There is no magic utilization percentage or guaranteed score increase. Preserve money for essential bills and closing reserves.
Discuss account changes before applying
Ask your loan officer how new debt, account closures or balance transfers could affect the file. Avoid borrowing more simply to chase a score.
Check your debt-to-income ratio
Compare qualifying gross income with monthly obligations and the estimated full housing payment. Your lender will determine which income and debts count.
Understand DTI →
Plan cash beyond the down payment
Include closing costs and reserves. Ask about assistance eligibility and repayment obligations without assuming a grant is available.
Ask how documented corrections can be reflected
A lender can explain whether an expedited report update or rescore is appropriate. Updated information does not guarantee a higher score or approval.
Compare several lenders
Ask whether a decline reflects a program rule, a lender overlay or information that can be corrected. Request a realistic next step rather than an approval promise.

Why comparing lenders matters with lower credit

Lenders can evaluate the same file differently. One lender’s credit overlay may be stricter than another’s, and rates and fees can differ even when both offer the same program. Compare complete written costs instead of choosing the first company that says yes.

On SLR, you choose eligible originators for your scenario. Your initial request does not include your name, email or phone; you separately authorize an introduction to an originator after reviewing responses. The platform uses a confirmed account email. Availability and responses are not guaranteed.

Compare quotes privately →Browse participating loan officers →

Waiting periods after bankruptcy or foreclosure

A waiting period is only one requirement. The program, discharge versus dismissal, foreclosure completion date, repeated events and documented exceptions can change the result. Give the lender the actual court and property records before relying on a timeline.

The table illustrates ordinary Fannie Mae conventional requirements. It is not an FHA, VA or USDA eligibility table. Government-backed programs use their own rules; ask the lender to confirm the current handbook, underwriting method, payment-history conditions and any required court or trustee permission. Do not use a single chart as a closing-date promise.

Fannie Mae conventional examples: ordinary waiting periods, subject to the full guide
Event	Ordinary waiting period	Check carefully
Chapter 7 or 11 bankruptcy	4 years from discharge or dismissal	Documented extenuating circumstances may permit a different period.
Chapter 13 bankruptcy	2 years from discharge; 4 years from dismissal	Discharge and dismissal are different events. Multiple bankruptcies can change the rule.
Foreclosure	7 years from completion	Exceptions have separate restrictions; a mortgage discharged in bankruptcy needs additional analysis.

Fannie Mae: credit events, dates and exceptions →HUD: current FHA handbook →VA: purchase-loan requirements →USDA: Guaranteed Loan Program →

Watch out for these

Guaranteed-approval ads: a promise made before review is not a lender’s approval of your complete file.
Credit-repair promises: you can dispute errors yourself for free. Federal law prohibits credit-repair companies from charging for services before those services are performed; accurate negative information cannot simply be erased.
Premature fees: for mortgages covered by Loan Estimate rules, the lender generally cannot impose fees before you receive the estimate and indicate intent to proceed, except a reasonable credit-report fee.
Payment-only comparisons: extending repayment may lower the payment while increasing overall cost. Compare the time in debt, APR, points and fees.

FTC: credit-repair protections →CFPB: fees before a Loan Estimate →Read your Loan Estimate →

Frequently asked questions

Can I get a mortgage with a 500 credit score?

Possibly. FHA permits 500–579 at a maximum 90% loan-to-value ratio, generally requiring at least 10% down on a purchase. Lenders may set higher minimums, and the full file still has to meet credit, income and property requirements.

What is the easiest home loan to get with bad credit?

No program is easiest for everyone. FHA is one option to discuss with lower scores; eligible borrowers can also ask about VA or USDA. The lender’s overlays, your payment history, income, debts and property determine the available path.

Can I get a mortgage with a 580 credit score?

An eligible FHA purchase borrower at 580 may qualify with as little as 3.5% down. That score does not establish approval. Ask the lender which additional requirements apply and compare the payment, mortgage insurance and closing costs.

Will shopping multiple lenders hurt my credit?

Hard mortgage inquiries may affect credit. FICO versions group rate-shopping inquiries within windows of 14 to 45 days; keeping applications within about 14 days is a conservative approach. Individual inquiries can still appear on your report.

Should I fix my credit first or apply now?

Ask a loan officer to compare a realistic option now with a plan to improve your file. Weigh housing costs while waiting, savings, and your deadline. A particular payment change does not guarantee a score increase or a future rate.

Your next-step checklist

Review reports and organize any corrections.
Ask which agency, underwriting method and lender requirements apply.
Budget for closing costs, reserves and the full monthly payment.
Compare written offers and decide separately whom to contact.

Test your assumptions with free calculators →Find your state’s limits and housing resources →

Sources and editorial context

Use these official references to check the underlying concepts and current requirements. The guide date describes this content, not a rate check or lender approval.

Published by Shop Lender Rates, operated by Mortgage Lending Group LLC. General education; not a rate offer, approval, lender ranking or agency endorsement. Availability varies by lender, borrower and property state. Editorial standards · Corrections and editorial contact.