12 Best Mortgage Lenders for Bad Credit Holders in 2022 (Updated)

Mortgage loans are an important part of any home purchase. Whether you’re buying a house or refinancing an existing loan, there are many factors that will affect how much you pay in interest over the life of the loan. There are numerous options out there for mortgage lenders for people with bad credit.

If you have a bad credit score and want to opt for a home loan then don’t worry, we are here for you. In this article, we have provided the 12 best mortgage lenders for home loans for bad credit. So make sure to stick to the end of the article to get all the necessary information you need.

If you have a bad credit history, there are a few options for you. You can wait until the negative marks on your credit history have gone away, take steps to improve your credit score or apply to a lender specializing in bad-credit home loans.

Generally, bad credit behavior remains on your file for five years and will then expire. Lenders will look favorably on loan applications from people with a long history of paying their bills on time.

How to Choose the Best Mortgage Lender With a Low Credit Score

It can be tough to select the best mortgage lender if you don’t have a high credit score, but there are a few things you can do to reduce your risks and find the best mortgage for you.

The first thing is to do your due diligence before deciding on a lender. You can start by reading customer reviews and browsing company websites. This will help you avoid dealing with a lender who doesn’t have a great reputation for their services.

Another option is to speak to a financial advisor or a real estate professional. These individuals should be able to help you find a lender who fits your needs and budget.

When you are looking for a mortgage lender, look for someone who is willing to offer mortgages with lenient credit requirements. You should also check out government-backed loan programs because they generally have less stringent qualifying requirements.

Also, you may want to consider getting a co-signer, as this will help your chances of qualifying for a low-rate mortgage. If you have a bad credit history, you can also ask your current lender if you can refinance with them for a lower rate. In addition, you might also qualify for an FHA rate-and-term refinance, which is an excellent option if you have bad credit.

When comparing mortgage lenders, make sure to compare their rates and fees. This will give you peace of mind in the future, and you can narrow down your choices to the best mortgage lender for your needs and budget.

How to Apply For Mortgage With a Low Credit Score?

If you’re a first-time home buyer with a low credit score, there are several steps you can take to boost your credit score. First of all, you need to pay your bills on time.

Lenders will look at your debt-to-income ratio (DTI), which is calculated by dividing your monthly obligations by your pretax income. A DTI of 36% or less is ideal for most lenders. Any higher than this can result in higher interest rates.

Depending on your situation, you may find it difficult to qualify for a conventional mortgage. If so, consider applying for an FHA loan or USDA loan.

While it can be frustrating to not qualify for a conventional loan, don’t give up. Instead, spend the next several months improving your credit score. Paying off high-balance credit cards, making on-time payments, and disputing errors in your credit report can all improve your credit score.

Additionally, saving up ten percent of your income as a down payment will make your mortgage application process easier. If your credit score is under 550, you may still qualify for a mortgage if you follow these tips.

However, different lenders will look at your application differently. If you have a cosigner with excellent credit, you may be able to get a better rate. Alternatively, you can look into special first-time buyer programs with lower credit requirements.

12 Best Mortgage Lenders for Home Loans for Bad Credit

If you have bad credit, obtaining a home loan might seem an impossible task. The good news is that there are a variety of lenders that specialize in home loans for people with poor credit. 

These lenders are backed by government agencies, such as the Federal Housing Administration, the Veteran’s Administration, and the U.S. Department of Agriculture. 

Here, we’ll take a look at some of these lenders, and what they have to offer borrowers with bad credit.

New American Funding

When it comes to applying for a home loan with New American Funding, you need to have a credit score of at least 620. While you can get approved with a credit score as low as 580, you can also qualify for a government-backed loan with a score as low as 500. 

New American Funding uses other factors to decide whether to approve your application or deny it, and the minimum credit score is slightly higher than the national average.

New American Funding’s website has many features, including a mobile app for loan payments and home value tracking. You can also find helpful calculators and a blog about current real estate trends. 

To apply for a mortgage from the NAF, you need a credit score of at least 620, a down payment of at least 3 percent, and a debt-to-income ratio below 43 percent.

Watermark Home Loans

In this review, we’ll look at the pros and cons of Watermark Home Loans and how they can help you get a loan. First, this lender is accredited with the Better Business Bureau (BBB) and has a 3.9/5 rating on average. 

Their customer reviews are mostly positive, with many citing their responsiveness and competitive rates. You can also find out whether you qualify for a loan by comparing your debt-to-income ratio, credit score, and down payment requirements.

The application process at Watermark Home Loans is similar to other lenders. They’ll provide you with a Loan Estimate, as well as options to lock in your rate. You’ll also receive a list of necessary documents, including a title report and appraisal. 

A loan officer will review all of these documents and then generate final loan documents for your signature. Watermark Home Loans isn’t the only bad mortgage lender out there, however.

Guaranteed Rate

When searching for mortgage lenders that will approve your application for home loans for people with bad credit, you may want to consider Guaranteed Rate. This company claims to be selective, but it also offers a wide range of loan types and rates. 

Their website lets you request a customized rate quote without giving them your personal information or doing a hard credit pull. Fortunately, this mortgage lender offers a wide range of loan options, including FHA and VA loans, with credit scores as low as five-80.

A typical bad-credit mortgage will require a 30 percent down payment. The interest rate will be double-digits, and you may also need financial reserves to cover three years’ worth of mortgage payments. 

However, if you have a bad credit score and are unable to meet these requirements, you should consider the many options available to you. Many bad-credit borrowers choose to obtain a government-backed loan instead. 

These loans are offered by government agencies, and have much less stringent requirements than conventional loans.


Northpointe Bank is a home loan lender that holds deposits for customers. The bank offers checking and savings accounts, home loans, and digital mortgage applications. 

The bank is branchless with headquarters in Grand Rapids, Michigan. Last year, the bank funded $14 billion in home loans, and it has offices in Florida, Michigan, and North Carolina. 

Northpointe Bank is accredited by the Better Business Bureau and is rated as “A+” for customer service.

Northpointe Bank has many loan options for those with less than perfect credit, including 0% down payment and VA loan programs. While not all loans are available in every state, they do offer a variety of mortgage options. 

For example, their Home Possible(r) program offers flexibility for limited-income borrowers. In addition to a low down payment, they let borrowers tap into home equity for a lower mortgage rate or change the terms of a VA loan.


If you have poor credit, a loanDepot mortgage lender may be a good choice. They offer a range of loan products and you’ll only deal with one person. This means you can weigh your options before making a decision

Many factors can affect your mortgage rate, including down payment requirements and discount points. Discount points can lower your interest rate, but they can also add thousands of dollars to your closing costs.

Different things are important to different people, so make sure to run several scenarios to see what works best for you.

The LoanDepot website provides information about the process, including a “Knowledge Cafe” where you can ask questions and get answers. Other helpful resources include a loan calculator and a list of documents needed for approval. 

The website offers eight calculators to help you determine whether or not your home loan application is approved. They also have a down payment calculator and a list of required income documents.


If you have bad credit or no credit, Carrington Mortgage may be a good option for you. While most mortgage lenders require you to pull your credit report to apply for a mortgage.

Carrington allows you to submit alternative credit data, such as proof of timely bill payments, to qualify. If you have a good credit score, you can still apply for a mortgage loan. 

Carrington has an A+ rating from the Better Business Bureau, which evaluates companies on transparency, honesty and response to consumer complaints.

In addition to conventional loans, Carrington also offers jumbo loans, which are loans that exceed the loan limits of many major financial institutions. 

This mortgage lender provides both adjustable-rate and fixed-rate jumbo mortgages. If you’re worried about your credit score, consider applying for a Federal Housing Administration (FHA) mortgage. 

FHA loans offer low down payments and flexible qualification requirements for borrowers with bad credit.


Whether you have excellent credit or a low score, Citibank can provide a home loan. The loan application process will vary depending on your situation, but there are some basic steps that you should follow. 

The first step in applying for a Citibank home loan is to complete an online application. All information, including contact and employment details, as well as income and assets, must be correct. 

If there is anything wrong, your application will probably be denied, but if all is correct, you will be moved to the next stage.

The application process is simple – existing customers of Citibank can apply online for a home loan. Existing customers can receive pre-approvals in three to seven working days. The loan amount is automatically deposited into their account. 

A credit check may be required during this process, but it will not negatively impact your score. Then, you can sign the loan agreement and close the transaction. Your new home loan will be in your bank account in no time.

Freedom Mortgage

If you are looking for home loans for bad credit, you may be wondering about the credibility of the company. However, there are several ways you can make sure the company is legit. One of the best ways is to check its Better Business Bureau rating. 

This rating indicates how responsive the company is to customer complaints. A company with an A+ rating will be transparent and respond to customer service issues. It may be a good idea to check its Better Business Bureau rating before applying for a loan from Freedom Mortgage.

Rates are not easy to find online, but it is possible to use the “Eagle Eye” feature to receive text alerts when interest rates are dropping. Freedom Mortgage’s website also offers an interest rate calculator, as well as basic homebuying information. The company adheres to conforming loan requirements set by the GSEs. The company charges no origination fees and typically funds a loan in two or three days.


If you’re considering a mortgage but have had bad credit, Caliber Mortgage might be the right option for you. 

Their nontraditional loan program accepts a wide range of financial situations, including high debt to income ratios, low credit scores, and low down payment requirements. 

You may have a recent short sale, bankruptcy, or other financial burdens that have prevented you from making regular mortgage payments. You may even have received negative reviews about a mortgage lender before. Caliber is a BBB-accredited company since 2014.

Caliber Home Loans offers a wide variety of government-backed mortgage products. They have a simple online application process that will lead you to a loan officer or consultant. They can also meet with you face-to-face to review your financial situation. 

In general, they receive fewer than one complaint per 100 customers. In a recent study by J.D. Power, Caliber was rated middle of the road for service, with an average rating of 4.63 stars.


For those with poor credit, Homebridge mortgage lenders are a great choice. They provide conventional mortgages, adjustable and fixed rates, and jumbo and super-jumbo loans. 

Their rates and requirements are competitive and they have a low credit score requirement of 500 to 580. Despite their low credit score requirements, many low-income borrowers are able to qualify for these loans.

Unlike many other mortgage lenders, Homebridge has a low credit score requirement. The minimum credit score is just 475. 

While this may not sound like a lot, it is still a better option than having bad credit and no money to put down. Homebridge also allows people with a lower credit score to refinance their mortgage. 

The benefits of refinancing include lower monthly payments and a lower interest rate. Despite this, you should note that Homebridge does not offer home equity loans.

Mr. Cooper

In addition to offering conforming mortgage loans, Mr. Cooper is a direct seller to Freddie Mac and Fannie Mae. It also has a relationship with Ginnie Mae, the agency that sets mortgage guidelines for new home buyers. 

Its mobile application, available to customers and outsiders, includes detailed home equity information. It also allows customers to monitor their loan application progress online from any device. And, if you have bad credit, Mr. Cooper also offers a rate discount, which translates to $500 per $100,000 financed.

Unlike other mortgage lenders, Mr. Cooper is primarily online. Their application process only takes a few minutes, and they post real-time updates to their customer accounts. They also utilize manual underwriting to ensure that applicants qualify for a loan.

They are the third-largest mortgage servicer in the U.S., and have several benefits to customers.


There are a few perks to using Alterra mortgage lenders for home loans for people with bad credit. Although they may not be the best lenders, their lax qualification requirements are comparable to other mortgage companies. 

They do not charge any application fees, and they also don’t charge you anything while you are buying a home. These perks are enough to make Alterra a top choice for people with bad credit.

Alterra Home Loans is a 100% Hispanic owned company and is committed to increasing homeownership among underrepresented groups. 

It has loan officers that speak both Spanish and English. The entire experience is fully online, and you can track the status of your application at any time.

Alterra also makes it easy for applicants to compare rates with competing mortgage lenders. One drawback to Alterra, however, is their lack of transparency about their rates.

What Are the Options Available to Get a Home Loan With a Bad Credit Score?

If you are having trouble getting a home loan because of a low credit score, you may be wondering how you can get approved. You may have past credit problems, or you may have been a victim of identity theft. However, you can still get approved for a home loan if you have enough income. 

Here are some tips to help you with the process:

Conventional Loans

Conventional loans are not backed by the government but are offered by many lenders. They are typically cheaper than FHA loans but can be difficult to qualify for.

Conventional loans are classified as either conforming loans or non-conforming loans, with conforming loans having strict guidelines set by Fannie Mae and Freddie Mac. 

Nonconforming loans may not have such guidelines, so you may be required to pay mortgage insurance. 

However, many lenders offer a large variety of down payment options and are willing to work with you regardless of your credit situation.

Conventional loans are available to those who have a poor credit score, but they do have certain requirements. In some cases, the lender will require mortgage insurance, which is 1.75% of the base loan amount. 

The insurance can be in the form of annual mortgage insurance, which varies according to the loan-to-value ratio. The mortgage insurance premium or loan guarantee fee is associated with the FHA loan, and may be required for the life of the loan. 

Jumbo conventional loans and conforming loans have higher limits, but may not offer the same flexibility.

FHA Loans

If you’ve had some financial problems in the past, you may have considered applying for an FHA loan. However, you may be wondering how you can get approved for one. 

The good news is that FHA-approved lenders use a CAIVRS system to verify debts and credit scores. If you’re interested in applying for an FHA loan, you must know what you need to do.

The FHA allows borrowers with a credit score as low as 500 to purchase a home, though many lenders will not work with borrowers with a score below that. 

Since FHA lenders overlay their own restrictions, some of them will refuse to approve loans to those with scores under 500. These loans also have strict rules about recent bankruptcy and foreclosure, as well as waiting periods of two to three years.

VA Loans

If your credit score is too low, you may want to consider a VA loan. The benefit of this type of loan is that it usually requires zero down payment, which can be a great deal for people with low savings. 

However, you will need to meet the requirements set forth by the lender, such as a high credit score. However, it is still worth checking into as this type of loan has more benefits than disadvantages.

Before applying for a VA loan, you need to make sure that you have a steady income. This may be a job or a combination of sources. 

While there is no definite minimum credit score required, lenders typically prefer a score of 620 or higher, though they may be willing to go lower. 

Additionally, VA loans can only be used for primary residences and not investment properties or vacation homes.

USDA Loans

Getting a home loan with a bad credit score can be difficult, but USDA loans can make it easier for you to buy a home. These loans are not based on credit score, but they do require you to have established credit. 

This is important for buyers with only one credit score. USDA loans will still accept people with lower credit scores, but they will have to show proof of their financial responsibility, such as having cash reserves and low debt.

To qualify for a USDA loan, you must be a U.S. citizen or permanent resident. Your property must be located in an eligible rural or suburban neighborhood, and it must be your primary residence. 

Your income must be stable and below the median income in your area. If you are unsure if USDA loans are right for you, get a free quote today. You might be surprised by what you can find.

Fannie Mae HomeReady

There are several ways to get a home loan with a low credit score. Fannie Mae HomeReady is one such option. This mortgage program matches qualified borrowers with lenders. 

There’s a minimum income to qualify for this. You can use the income from others living with you if you are currently renting an apartment. 

Also, you don’t have to live with the person now, but you do need to agree to live with them for a period of 12 months after purchasing a property. You don’t have to be a US citizen to live with a person you’re renting out.

The programs available through Fannie Mae HomeReady are geared toward low-to-moderate income households. The conventional 97 loan is aimed at borrowers with good credit and income. 

Depending on your credit score and financial situation, you may qualify for either of these programs. However, you should be aware that the HomeReady loan requires a 3% down payment.

Freddie Mac Home Possible

Here are a number of options for first-time homebuyers who have a bad credit score to purchase a new home. One of those options is the Freddie Mac Home Possible mortgage. 

This mortgage program offers a low down payment option for those with a 620 credit score or lower. It allows borrowers to put as little as 3% down and has many flexible funding options. Because it is backed by Freddie Mac, it is easier to get approved for a loan.

There are other options to consider. You can use a 3% down payment to purchase a home with a Freddie Mac Home Possible mortgage. You can use gift funds or even sweat equity to make a down payment. 

To qualify for this mortgage, you need to be at least 80% below the area’s median income. You can use an income verification tool to find out your income level and other eligibility requirements

While these loans are available to many home buyers, they often have higher interest rates than their qualified counterparts. 

For example, contracting business owners often have variable incomes and may not know what their earnings will be from year to year. 

This means that a qualified mortgage is unlikely to be in their best interests. Non-QM loans are a viable alternative for many of these people.


Not all mortgage lenders offer the same products, and you need to shop around to find the best interest rates and terms. 

A bad credit score doesn’t always mean you can get the best rate, so don’t be scared off by the higher interest rates. 

Read customer reviews, check out the BBB, and look into the lender’s reputation. Some lenders only provide certain loan types and you should never borrow from a company that doesn’t feel comfortable and understandable.

If your credit score is less than 600, you can still qualify for a home loan, but these loans tend to come with high-interest rates, which puts you at risk of default. 

Unfortunately, most mortgage lenders do not offer loans for people with low credit scores, but some do. Although you may be able to qualify for one of these loans, you should consider the fact that these loans are generally more difficult to get, and you should hold off on buying a home until your credit score improves.

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