How to Get a Mortgage With a Low Credit Score

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.

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.

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.

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.

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.

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.

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

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.

• Tip: Pay off small debts or avoid taking new loans before applying.
• Ideally, your DTI should be below 43%, including your prospective mortgage.