Best bad credit lenders in 2024

When you want to take out a home loan, lenders will review your credit report to check whether you qualify. They’ll also use the information from your credit history to set your lending terms. It may be possible to get a mortgage with a poor credit score — generally, one that falls below 580 — but it depends on the lender you work with and the mortgage you want to get. That’s why it’s important to compare lenders to find the best fit. 

Before you start looking for the best bad credit lenders for a home loan, you can do a free credit check to see where your credit score falls. Here’s a look at FICO score ranges by tier: 

• Poor: 300 to 579
• Fair: 580 to 669
• Good: 670 to 739
• Very good: 740 to 799
• Excellent: 800 to 850

You may qualify for better loan terms if you improve your credit score, but it can take months to see significant changes. In addition, it takes seven years for negative credit information — such as a defaulted auto loan or late payments — to drop off your credit history. If you are in a time crunch and unable to improve your score before applying for a loan, here is a look at the best bad credit lenders in 2024.

Best mortgage lenders for bad credit

Mortgage lenders look at several factors to determine your borrowing eligibility, with a credit check being a key risk assessment tool. It helps the lender predict whether you’re likely to make your home loan payments on time.

If you don’t have good credit,, you’ll need to find a mortgage lender with flexible lending criteria. It should also offer excellent customer service, competitive rates  and fees, and a strong reputation. Here’s a rundown of some of the best mortgage lenders for bad credit: 

New American Funding 

According to its website, New American Funding is the largest Hispanic-owned mortgage lender in the U.S. and one of the top lenders to the Black and Hispanic communities. It’s licensed in every state and Washington, D.C., and you’ll find branch locations in 43 states. Customers can get help in English and Spanish and may qualify for down payment and closing cost assistance. 

Rocket Mortgage

From 2010 to 2022, Rocket Mortgage earned the No. 1 spot for customer satisfaction in J.D. Power’s U.S. Mortgage Origination Satisfaction Study. The lender offers a completely digital loan application process but also provides help via phone and email. If you hire a Rocket Homes real estate agent, you can get up to $10,000 in closing credits. It also has several mortgages for borrowers with low credit scores, but it doesn’t offer USDA loans.

Better.com

Better is a fintech mortgage company that specializes in streamlining the home loan process. You can lock a mortgage rate and get a commitment letter within 24 hours, and the lender says its digital home loans close 17 days faster than the industry average. There’s 24/7 live customer support if you need help throughout the loan process, and Better can match you with attorneys, homeowners insurance companies, and title services, which takes some of the work off your plate. 

Mutual of Omaha

Mutual of Omaha offers adjustable-rate and fixed-rate loans, conventional mortgages, jumbo loans, VA loans, FHA loans, and USDA loans in 48 states and Washington, D.C. Borrowers can get help via the mobile app, an online chat feature, and branch locations in 32 states. 

Northpointe Bank

Northpointe Bank offers conventional and jumbo loans, as well as VA, FHA, and USDA loans. It offers several programs with a down payment as low as zero: VA loans, USDA loans, and doctor loans, which are for medical professionals who have student loan debt. Northpointe Bank helps its customers find state programs that can help them secure down payment assistance or grants. 

Methodology

To determine the best bad credit mortgage loan companies, Credible evaluated lenders based on several different categories: rates and fees, reputation, eligibility, efficiency, customer experience, and discounts and perks. We also looked at the types of loans offered by each lender for research purposes only, they did not factor into the overall score. We assigned a score out of five stars to each lender based on our findings. Read more about our methodology here.

How your credit score impacts mortgage

Your credit score plays a critical role in determining your eligibility and your mortgage rate. That’s because your credit score reflects how you’ve managed credit card debt and other types of debt  in the past. Lenders analyze your data from three major credit bureaus (Equifax, Experian, and TransUnion) to determine the likelihood of debt repayment  — how likely you are to repay  your home loan — in the future. 

A low credit score may indicate you’ve taken out a lot of debt or have an inconsistent credit and payment history.  Lenders generally see this as a greater risk because you might be more likely to make inconsistent or late payments.

The table below shows credit score tiers with sample mortgage rates. Borrowers with higher credit scores tend to receive lower interest rates and APRs, which can help them save on their monthly mortgage payments. Those savings add up over time. 

Note: Figures here are for demonstrative purposes only and do not represent an advertisement for available terms. This example is based on a $500,000, 30-year loan in New Jersey as of June 2024. Calculations were made using the MyFico loan savings calculator.

How to get a mortgage with bad credit

Getting a bad credit loan might cost more over time because of high interest rates and annual percentage rates (APR), but you may prefer this option if you’re looking to build home equity. Here are some tips you can use to get a mortgage with bad credit: 

• Make a list of potential lenders: Every financial institution has different eligibility criteria and a different formula for setting rates, so it’s important to see what’s available. Compare online lenders, credit unions, and banks to find home loan options that suit your needs. Research shows that even a small difference in interest rates can save you thousands over the life of the loan.
• Get quotes: Contact your prospective lenders and ask for a rate quote and closing cost estimate. Ask for a prequalification, which involves a soft credit pull and won’t hurt your credit score. Compare the loan offers you receive, and look at repayment terms, lender fees, and loan amounts.
• Explore government-backed loans: FHA loans are designed for people with lower credit scores, so check whether this option works for you. Other options include VA and USDA loans, which don’t require a down payment. Your lender can help you understand the eligibility requirements. 
• Find a cosigner: If you have bad credit, consider asking a trusted family member or friend to become a co-signer or non-occupant co-borrower on the home loan. This may boost your chances of qualifying for the loan and getting an affordable interest rate. 

Best mortgages for bad credit FAQ 

Which mortgage is the easiest to qualify for?

FHA loans are designed for people with low credit scores, so they might be the easiest mortgage to qualify for if you have poor credit. You may qualify with a minimum credit score requirement of 580 if you put down at least 3.5%. 

Can I buy a house with a 575 credit score?

It’s possible to qualify for an FHA loan with a credit score as low as 500, as long as you put down at least 10%. Lenders may also have portfolio mortgages that allow for low credit scores. 

What loan option is best for bad credit?

An FHA loan is the best mortgage for people with bad credit. Borrowers may be able to qualify with a credit score as low as 500, as long as they put down at least 10%.

If I have a bad credit score, should I wait to buy a house?

If you have bad credit, you don’t have to wait before buying a house. You may be able to qualify for an FHA loan if your credit score is at least 500 and you find a lender with flexible eligibility criteria. However, getting a home with poor credit will likely be more costly to you in the long run. People with lower credit scores tend to receive higher interest rates to offset their risk. You can also refinance later if your credit improves and you can get a lower interest rate, just keep in mind that you’ll have to pay closing costs when you refinance your home loan.