How to Get a Mortgage With a Low Credit Score

Buying a home is one of the most significant financial milestones, but if your credit score isn’t perfect, it can feel like an uphill battle. The good news is that having a low credit score doesn’t automatically disqualify you from getting a mortgage. There are strategies and loan options designed to help people with less-than-perfect credit achieve homeownership. Here’s everything you need to know.

Understand What “Low Credit Score” Means

Credit scores typically range from 300 to 850. Generally:

Excellent: 750+
Good: 700–749
Fair: 650–699
Poor: Below 650

If your score falls below 650, you might face higher interest rates or more stringent loan requirements, but it’s not impossible to get approved for a mortgage. Knowing your exact score can help you target the right lenders and programs.

Explore Government-Backed Loan Programs

Government-backed mortgages are often more flexible with credit requirements:

FHA Loans: The Federal Housing Administration insures loans with credit scores as low as 580 (and sometimes as low as 500 with a larger down payment). FHA loans often require just a 3.5% down payment.
VA Loans: If you’re a veteran or active military member, VA loans offer favorable terms with no minimum credit score requirement in many cases.
USDA Loans: For rural homebuyers, USDA loans can offer zero-down financing and are more lenient with credit scores.

These programs can make homeownership accessible even if your credit history isn’t perfect.

Save for a Larger Down Payment

A larger down payment can offset a lower credit score in the eyes of lenders. Why? Because it reduces their risk—if you default, they have a cushion.

Typical down payments:
Conventional loans: 5–20%
FHA loans: 3.5%
Tip: Saving 10–20% or more can significantly improve your chances of approval and may help you secure a better interest rate.

Consider a Co-Signer

Having a co-signer with good credit can help you qualify for a mortgage you might not get on your own. Lenders take comfort in knowing that a responsible co-signer will share the obligation if you default.

Important: Both parties are legally responsible, so make sure it’s someone you trust.

Shop Around for Lenders

Not all lenders treat low credit scores the same way. Some specialize in working with buyers who have imperfect credit. Consider:

Credit unions and community banks (often more flexible than big banks)
Online mortgage lenders (some offer programs designed for low credit scores)
Mortgage brokers who can match you with lenders that fit your financial profile

Comparing multiple lenders can save you thousands in interest and fees.

Improve Your Credit Score Before Applying (If Possible)

Even a modest improvement in your credit score can reduce your interest rate and monthly payments. Some strategies include:

Paying down outstanding debts
Making all payments on time
Avoiding new credit inquiries before applying
Correcting errors on your credit report

Even waiting a few months to boost your score can make a big difference.

Be Prepared for Higher Interest Rates

Low credit scores usually mean higher interest rates. While this increases monthly payments, there are ways to mitigate the impact:

Consider a shorter loan term (e.g., 15 years instead of 30)
Look into buying points to lower your rate upfront
Factor in your total budget to ensure the mortgage remains manageable

Keep Your Debt-to-Income Ratio Low

Lenders evaluate your debt-to-income (DTI) ratio to see if you can handle mortgage payments. Even with a low credit score, a low DTI can help you get approved.