Credit: Marje/Getty Images;Illustrated by Issia Davis/Bankrate
If your credit requires work, that doesn’t necessarily mean you are not eligible for a mortgage. There are lenders and loan programs for poor credit borrowers, including FHA loans. Here is the guide to the best mortgage lenders for bad credit in 2025.
Best Mortgage Lenders for Bad Credit
| Lender | Credit Requirements | The lowest down payment | Bankrate Score |
|---|---|---|---|
| Veterans United Home Loan | 620 traditional loans and VA loans | For traditional loans, that’s 3%. 3.5% of FHA loans. It is not available for VA or USDA loans | 4.9 |
| Wells Fargo | 620 traditional loans | For traditional loans, that’s 3%. 3.5% of FHA loans, not VA or USDA loans | 4.8 |
| Bison State Bank | 620 of traditional loans. 580 FHA and VA loans | For traditional loans, that’s 3%. 3.5% of FHA loans, not VA or USDA loans | 4.8 |
| New American Funding | 620 traditional loans | For traditional loans, that’s 3%. 3.5% of FHA loans. It is not available for VA or USDA loans | 4.6 |
| Old National Bank | 620 traditional loans | private | 4.5 |
| rate | 620 traditional loans | For traditional loans, that’s 3%. 3.5% of FHA loans. There is no one for VA loans | 4.5 |
How a low credit score affects your mortgage
The highest interest rates are sent to borrowers with the strongest credit score. If your score is low, you will quote a higher fee.
Let’s say you’re getting a $380,000 mortgage, a fixed 7% rate. The monthly payment is $2,528 (excluding homeowner premiums and property taxes) and will pay $530,134 over a 30-year loan period.
If you instead improve your credit and the 6.5% percentage is lower, your monthly payments will drop to $2,402, and you’ll end up paying $484,669 for the duration of the loan. Aside from the payment savings of about $125 a month, this is an interest savings of about $45,000.
Compare different scenarios with higher and lower prices using Bankrate’s mortgage calculator.
How to get a mortgage with poor credit
It doesn’t mean that you won’t get your mortgage approval automatically because of your poor credit score, but you can expect to pay more on the loan. There may also be fewer options to choose from. Follow these tips to increase your approval odds:
-
Shop with lenders who specialize in mortgages for borrowers with fair or inadequate credit.
- Consider using a credit union or online lender where there may be more flexible loan options.
- Find out what government-supported loan programs are. For example, FHA loans have lower minimum credit score requirements than traditional loans.
- Ask your trusted friend or relative for great credit to co-sign your mortgage.
- Stop billing with your credit card, refrain from opening a new credit account before applying for a mortgage, and during the application process.
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