Low or bad credit score borrower FAQs
Can I get approved for a mortgage with a low credit score?
Absolutely you can. Lenders consider four primary factors when reviewing a mortgage application:
- Your credit score.
- The amount of debt you carry compared to the income you receive.
- How much money you’re putting down.
- Your employment history.
Two or three positive factors might outweigh a negative one.
Federal and state programs can help borrowers with low or bad credit scores, especially if they’re first-time buyers. Loans backed by the FHA allow for lower credit scores and are easier to qualify for than conventional loans.
Meanwhile, state-sponsored first-time home buyer programs offer down payment assistance and grants to enhance your borrowing power.
» MORE: Down payment assistance: How to get help buying a house
What is the best lender for bad credit home loans?
Finding the right lender for you is a matter of choosing the best mortgage for your needs, and then applying to lenders that specialize in that type of business.
If you have a military connection, you’ll want a lender that underwrites mortgages backed by the Department of Veterans Affairs, or VA loans.
If you think an FHA home loan is the way to go, you’ll seek out high-volume FHA lenders.
To drill down to your best loan options, use NerdWallet’s credit score mortgage calculator to discover the loan products best suited for your situation.
» MORE: Get your credit score for free
Can I get approved for a home loan with a 500 credit score?
If you have a good job history and a bit of money saved for a down payment, it’s possible to qualify for a mortgage with a credit score as low as 500. You’ll want to talk to lenders specializing in FHA mortgages. Shop around and see which makes you the best offer.
With a FICO score of 500 to 579, you’ll likely need to put 10% down to qualify. Improve your credit score to 580 or higher and you may qualify for a loan with a down payment as low as 3.5%.
» MORE: How much house can you afford?
What is the lowest credit score for a mortgage?
A credit score of 500 is the minimum most lenders will consider. The higher your credit score, the more loan options you’ll have — and the lower your down payment can be.
» MORE: The credit score needed to buy a home
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