The Best Mortgage Lenders for Low Credit Scores of August 2022
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The best mortgage lenders for low credit scores of August 2022
Getting a mortgage with a low or bad credit score can be tricky, but it's not always impossible.
What constitutes a "good" or "bad" credit score when it comes to mortgages? The credit score you'll need to buy a house varies depending on the type of mortgage you get, but you'll generally have a harder time getting approved for a mortgage if your score is below 620.
If you have a lower score, you might still be able to qualify for a mortgage. You just need to work with a lender that has mortgage programs that suit your needs.
To find the best low credit score mortgage lenders, we looked for lenders that offer mortgages that allow scores below 620, including FHA mortgages, and have flexible credit requirements on one or more of their mortgage products.
Here are the best mortgage lenders for borrowers with low credit scores.
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Carrington Mortgage Services
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Guild Mortgage
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New American Funding
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Rocket Mortgage by Quicken Loans
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Citibank Home Mortgage Loans
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CashCall Mortgage
Best overall for low credit scores: Carrington Mortgage Services
- Has multiple mortgage options for borrowers with low scores
- Carrington Flexible Advantage loan will consider borrowers who have recent credit events including bankruptcy, short sale, or late payments.
- Not available to residents of North Dakota or Massachusetts
- No home equity loans, HELOCs, reverse mortgages, or construction loans
- No personalized interest rates shown online
- Offers mortgages in all US states except Massachusetts and North Dakota
- Minimum credit score and down payment displayed are for FHA mortgages. If your score is below 580, you'll need to put down at least 10%.
The bottom line: Carrington allows credit scores as low as 500 on its government-backed mortgages, and has options for borrowers with recent negative events on their credit reports.
Carrington's standout feature is its Carrington Flexible Advantage mortgage, which accepts borrowers who have recent negative credit events, such as a foreclosure or bankruptcy, on their credit reports. The minimum credit score for this mortgage is 550.
All of Carrington's government-backed loan options, which include its FHA, USDA, and VA mortgages, allow credit scores as low as 500.
Carrington has an A+ rating from the BBB.
Best for those with no credit history: Guild Mortgage
- Apply with alternative credit data if you have no credit score
- Hybrid digital closing option means you'll have a faster closing appointment
- No home equity loan, HELOC, or construction loan
- Charges funding, underwriting, and wire transfer fees
- Sometimes charges origination fees
- Can't see mortgage rates online
- Offers mortgages in every US state except New York and New Jersey
- Branches in 32 US states
- Minimum credit score and down payment displayed are for FHA mortgages. If your score is below 580, you'll need to put down at least 10%.
The bottom line: Guild Mortgage allows credit scores as low as 540 on its FHA and USDA mortgages. It also accepts non-traditional credit from borrowers who have no credit history through Guild's Complete Rate program, which is available on its FHA, VA, and USDA mortgages.
Guild Mortgage is an affordable option for borrowers who have lower scores and those who don't have one at all. If you don't have an established traditional credit history, you can use things like your rent, utility, or car insurance payment history to prove your creditworthiness. Guild can also help connect you with down payment assistance programs in your county.
Guild mortgage has an A- rating from the BBB. It ranked No. 1 in customer satisfaction on J.D. Power's 2021 study of mortgage originators.
Best for a variety of options: New American Funding
- Variety of home loans, including a specialized buydown loan or I CAN loan
- Apply with non-traditional forms of credit if you have no credit score
- You may be able to get a mortgage with a score below 580 with compensating factors
- No home equity loan, HELOC, or construction loan
- Offers mortgages in every US state except Hawaii and New York
- Branches in 32 US states
- Minimum credit score and down payment displayed are for FHA mortgages. If your score is below 580, you'll need to put down at least 10%.
The bottom line: For borrowers with low credit scores, New American Funding is a good option that has flexible requirements on its government-backed mortgages.
New American Funding is another affordable option for borrowers thanks to its variety of mortgage options and flexible credit requirements.
The minimum credit score for its FHA, VA, and USDA loans is 580, though borrowers may be able to go lower with compensating factors. This lender also accepts non-traditional credit (such as proof of rent or utility payments) from those who have no score.
Additionally, its I CAN mortgage lets borrowers choose any term length between eight and 30 years. However, you'll need at least a 620 credit score to qualify for this mortgage.
New American Funding has an A+ rating from the BBB.
Best for an easy online experience: Rocket Mortgage
- Quick, user-friendly online experience
- Terms as short as eight years
- Offers mortgages in all 50 US states and Washington, DC
- Can't speak to an employee face-to-face (although you can talk via live chat or over the phone)
- No USDA loan, home equity loan, HELOC, reverse mortgage, or construction loan
- Can't apply with non-traditional credit data (like utility bills)
- Offers homes loans in all 50 US states and Washington, DC, but there are no physical branches
- Minimum credit score and down payment displayed are for FHA mortgages.
The bottom line: Rocket Mortgage is a good option if you want a smooth online experience and prioritize customer support.
Rocket Mortgage ranked as the top lender for customer satisfaction from J.D. Power for 11 consecutive years, and ranked No. 2 in 2021. Rocket Mortgage offers a quick and easy online experience, with live online chat.
This lender requires a minimum credit score of 580 for its FHA and VA mortgages.
Rocket Mortgage has an A+ rating from the BBB.
Best for low down payments: Citibank
- Special pricing available for deposit account customers
- HomeRun mortgages let borrowers qualify with non-traditional credit
- Low-income borrowers in eligible areas can get up to $5,000 in closing cost assistance
- Can’t see customized rates online
- Application process isn't completely online — you'll need to speak over the phone first
- Offers mortgages nationwide
- You can complete your application online after speaking to a mortgage representative
- Citibank’s HomeRun mortgage allows eligible borrowers to put as little as 3% down with no mortgage insurance
- Minimum credit score and down payment displayed are for FHA mortgages.
The bottom line: Citibank's HomeRun mortgage is an affordable option for borrowers looking for a mortgage that accepts non-traditional credit.
While many lenders offer mortgage options that allow 3% down payments, Citibank's HomeRun mortgages allow 3% down with no mortgage insurance requirement, meaning you'll save money each month on your mortgage payments. You can also use non-traditional credit to apply for one of these loans, though you'll need to put at least 5% down if you plan to do so.
Citibank doesn't list its minimum FHA score requirements online, but you may be able to get a mortgage with a score as low as 580 if your finances are otherwise in good shape, according to a loan officer who spoke with Insider.
Citibank has an F rating from the BBB due to unanswered and unresolved complaints and government action against the business.
Though this lender is rated poorly by the BBB, it earned the No. 3 spot in customer satisfaction on J.D. Power's 2021 study.
Best for self-employed borrowers: CashCall Mortgage
- Will pay some of your third-party closing costs
- Live chat makes it easy to connect with an expert
- Has mortgage options for self-employed borrowers, independent contractors, and investors
- Can’t see customized rates online
- Doesn’t operate in eight states, including New York, Connecticut, Delaware, Maine, Maryland, Massachusetts, Wyoming, and Missouri
- Doesn’t accept alternative credit data from borrowers who have no credit score or poor credit
- Charges an origination fee of $995
- Lends in 42 states and Washington, DC
- Minimum credit score and down payment displayed are for FHA mortgages.
The bottom line: For self-employed homebuyers with lower scores, CashCall Mortgage has two options that provide the flexibility some of these types of borrowers need to obtain mortgage approval.
CashCall Mortgage's loans for self-employed borrowers, independent contractors, and commission-based earners offer an alternative to providing tax returns and W-2s.
Its bank statement loans let borrowers use their bank statements to document their income, while its 1099 earner loans accept 1099 forms as documentation, with no tax returns required. Both of these mortgages allow credit scores as low as 600.
CashCall Mortgage is the trade name for Impac Mortgage Corp., which has an A+ rating from the Better Business Bureau.
Other mortgage lenders we considered
- Guaranteed Rate: Those with no credit score may be able to get a mortgage with Guaranteed Rate using non-traditional credit. But it says you'll need a "favorable credit score" to get an FHA mortgage.
- Wells Fargo: Though this lender offers a few different affordable mortgage options, it earned a below average customer satisfaction score from J.D. Power and has dealt with several controversies in recent years.
- Mr. Cooper: Mr. Cooper ranked low in customer satisfaction in J.D. Power's 2021 study.
- Truist: You may be able to qualify using non-traditional credit with Truist. But the lender ranked below the industry average in J.D. Power's 2021 study.
- Freedom Mortgage: Freedom Mortgage received a low ranking in customer satisfaction from J.D. Power.
- LoanDepot: LoanDepot scored above the industry average in customer satisfaction in J.D. Power's annual study, but it doesn't have any flexible credit requirements.
- Flagstar Bank: This bank has an A+ from the BBB, but doesn't have flexible credit requirements.
- Pennymac: PennyMac is another lender that ranked low in customer satisfaction in J.D. Power's annual study.
- Paramount Bank: This bank offers FHA loans, but doesn't show interest rates on its site.
- Regions: Regions offers FHA loans, but this bank only has branches in certain parts of the US.
Methodology: How we chose the best low credit score lenders for 2022
In choosing the best mortgage lenders for low credit scores, Personal Finance Insider looked for lenders that:
- Offer mortgages that allow scores below 620, including FHA mortgages.
- Have flexible credit requirements on one or more of their mortgage products — this could include accepting non-traditional forms of credit (such as proof of rent payments in lieu of a formal credit history) or considering borrowers who have negative events (such as a bankruptcy or foreclosure) on their credit reports.
FHA mortgages can be a great option for those with lower scores, but some lenders that offer these mortgages require higher scores than the minimum of 580 (or 500 with a 10% down payment). Some lenders, for example, require scores of 620 across the board, regardless of the specific loan type. All of the lenders on this list allow scores of 600 or lower on their FHA mortgages.
Many of the lenders we included also have their own specialty mortgage products that allow scores below 620, such as Carrington's Flexible Advantage mortgage.
We also looked at the following:
- Customer satisfaction. If the lender appeared in the J.D. Power 2021 Primary Mortgage Origination Satisfaction Survey, we looked at its ranking. If it wasn't in the survey, then we read online customer reviews.
- Ethics. Most our top picks received an A+ from the Better Business Bureau, which measures companies' trustworthiness. The exceptions are Guild Mortgage, which has an A- rating, and Citibank, which has an F. We also researched and considered any scandals in the past three years.
Rocket Mortgage is the only lender on our list that does not have flexible credit requirements. But we still included it because it thrives in other areas, like customer satisfaction.
Are these mortgage lenders trustworthy?
We have included each lender's grade from the Better Business Bureau. The BBB evaluates businesses by looking at companies' responses to customer complaints, transparency about business practices, and honesty in advertising.
| Mortgage lender | BBB rating |
| Carrington Mortgage | A+ |
| Guild Mortgage | A- |
| New American Funding | A+ |
| Rocket Mortgage | A+ |
| Citibank | F |
| CashCall Mortgage | A+ |
Most of our top picks have an A+ from the BBB. The two exceptions are Guild Mortgage, which has a A- rating, and Citibank, which has an F rating.
The BBB says that Guild Mortgage received a A- rating due to government action against the lender. In 2020, Guild Mortgage paid the United States $24.9 million when it was accused of approving FHA mortgages for people who didn't qualify, resulting in loan defaults.
Citibank's poor rating is due to unanswered and unresolved complaints and government action against the business, which involved Citibank's failure to prevent the deletion of subpoenaed audio recordings due to a known issue with its audio preservation system. But the lender is strong in customer satisfaction and has good customer reviews on its Zillow profile.
In 2019, the US Justice Department required Rocket Mortgage's parent company Quicken Loans to pay $32.5 million for alleged mortgage fraud. The Justice Department claimed Quicken Loans approved mortgage applications it shouldn't have. Although Quicken Loans paid the settlement, the company never admitted to mortgage fraud.
Frequently asked questions
What is the lowest credit score I can get a mortgage with?
A credit score of 500 is generally the lowest score you could get a mortgage with, and you'll need to find a lender that allows these types of mortgages. You'll likely need a large down payment to get a mortgage with a score this low.
To have a larger selection of lenders to choose from, you'll need a score of at least 620.
Can a 500 credit score buy a house?
Yes, you may be able to get an FHA mortgage with a credit score as low as 500 — but you'll need a 10% down payment. This is in contrast with getting an FHA mortgage with a 580 credit score and 3.5% down payment.
What is the easiest mortgage to qualify for?
An FHA mortgage is usually the easiest home loan to get. You can qualify with a credit score as low as 580 (with a 3.5% down payment) or even 500 (with a 10% down payment). You can also usually qualify for an FHA mortgage with more debt than with a conforming mortgage.
These are general rules of thumb, but exact requirements will vary by mortgage lender.
How does alternative credit data work?
Most lenders pull your credit score when you apply for mortgage preapproval. If you don't have a credit score, you may have a hard time finding a bank that will lend to you.
But many of the lenders on our list allow alternative credit data, also known as non-traditional credit. You can show proof of paying bills like rent, utilities, and insurance on time, and this provides evidence that you are financially reliable even though you don't have a traditional score.
Each lender has different requirements for alternative data. For example, a company may require proof of on-time rent payments dating back 12 months.
Should I get a mortgage with a low credit score?
It depends on your situation. A poor credit score is sometimes a sign of larger financial issues — maybe your score is low because you don't pay your bills on time or because you have a lot of debt. In these cases, adding another payment and form of debt by taking out a mortgage may not be a great idea.
Getting a mortgage with a low credit score can also be expensive. The lower your score, the higher your rate will be to compensate for the risk the lender is taking.
But if you feel confident that you can afford monthly payments and are working to improve your credit score, it may be a good time to buy a home.
Experts' advice on choosing a mortgage lender
We consulted mortgage and financial experts to inform these picks and provide their insights about mortgage lenders. Our experts have also provided advice about how to know whether you're ready to get a mortgage, and how to decide which type of mortgage is best for you.
- Anthony Park, author of "How to Buy Your Perfect First Home"
- Lauryn Williams, certified financial planner, founder of Worth Winning Financial Planning
- Julie Aragon, mortgage broker, founder of Aragon Lending Team
- Laura Grace Tarpley, certified educator in personal finance, editor of banking and mortgage at Personal Finance Insider
Here's what they had to say about mortgages. (Some text may be lightly edited for clarity.)
What factors should someone take into consideration when choosing a mortgage lender?
Anthony Park, author:
"The canned answer is to just go with the lowest rate. However, you also want to take into account who's going to serve your loan best. Are repayments going to be easy for you? Who is most likely to be able to help you if you need to take out a HELOC or refinance later, versus somebody who's more of a one-off type?
"They may have the lowest rates to get you involved, but they might have very, very little hand holding after the fact. I wouldn't recommend paying an exorbitant amount more for potential services in the future, but just don't always necessarily go with the rock-bottom lowest rate. There's sometimes a cost with that."
Laura Grace Tarpley, Personal Finance Insider:
"Apply for preapproval with multiple lenders. Each lender's preapproval letter states how much it would lend to you, and it locks in your interest rate. It's an effective way to compare lenders and see which will give you the best deal.
"But try to apply with all the lenders within a month or so. When you apply for preapproval, a lender does a hard credit inquiry. A bunch of hard inquiries on your report can hurt your credit score, unless it's for the sake of shopping for the best rate. If you limit your rate shopping to a month or so, credit bureaus will understand that you're looking for a home and shouldn't hold each individual inquiry against you."
How can someone decide between a conventional mortgage vs. a government-backed mortgage?
Anthony Park, author:
'It really depends on if you qualify. If you do qualify for FHA or VA mortgages, those are no-brainers. just because the terms are so favorable. If you don't qualify, you fall back by default onto conventional mortgages."
Julie Aragon, Aragon Lending Team:
"The most common government loan that's widely available to almost everyone is the FHA loan. There's a couple of reasons why somebody would go with FHA instead of conventional one. Their credit is a little on the crummy side, let's say below 700. You can get conventional with down to a 620 score, but the mortgage insurance gets really expensive. FHA doesn't discriminate — no matter how perfect or crappy your credit is, the mortgage insurance is the same."
How can someone know whether they're financially ready to buy a home?
Lauryn Williams, CFP:
"You should have funds left over after everything is said and done as it pertains to purchasing the home. So if you don't have an emergency fund plus a down payment, you're probably not ready to purchase a home. Another thing I think about is credit card debt. While you can be approved for a mortgage with credit card debt and student loans and very little cash on hand, you put yourself in a very risky situation."
Laura Grace Tarpley, Personal Finance Insider:
"You should be able to afford the extra costs that come with owning a home, like home repairs or lawn care. You didn't have to budget for those things when you rented, because the landlord was responsible for maintenance."
Mortgage and refinance rates by state
Check the latest rates in your state at the links below.
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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer. Read our editorial standards.
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