Top Low Credit Score Mortgage Lenders in 2021



If your loan is not ideal and you want To buy a house or refinance a mortgageThere are mortgage lenders with low credit ratings that offer you options. Bank rate simplified find creditors who provide home loans for bad credit based on criteria such as a minimum minimum credit rating, the widest range of loan programs for borrowers with low credit history, and down payment assistance. Here’s our guide to the best mortgage lenders for low credit borrowers in 2021.


To determine the best mortgage lenders for borrowers with low credit ratings, Bankrate ranked lenders on several criteria, including availability of low credit or low down payment loan programs; credit rating requirements and flexible underwriting.

Best mortgage lenders for borrowers with low or bad credit history

New American funding

With an A + rating from the Better Business Bureau and five out of five stars in the Bankrate rating, New American Funding is highly regarded by borrowers as one of the best mortgage lenders for those with less desirable credit. This reputation is underlined by the New American Funding portfolio of loan products, which includes:

  • Conventional loans (minimum credit rating 620)
  • FHA loans (minimum 500 credit points)
  • VA loans (no minimum credit score requirement)
  • USDA Loans (minimum 580 credit points)
  • Mortgage “I CAN” with flexible loan terms (at least 620 credit points)
  • Reverse mortgage (no minimum credit score requirement)

Notably, New American Funding can help qualify borrowers without credit for certain types of loans by looking at other information, such as payment history, instead of credit ratings.

New US funding is available in all states except Hawaii and New York, and most have chapters. One disadvantage is the lack of publicly available information on the fees that a lender can charge for a loan. Be sure to ask about the lender’s fees when considering loan options.

Carrington Mortgage Services

Ideal for those with low or poor creditworthiness, Carrington Mortgage Services provides certain types of financing designed for borrowers with a credit rating of 500 or more, including:

  • Adjustable Rate Mortgages (ARM)
  • FHA loans
  • VA credits
  • USDA loans

Special loan programs are also available, including “Flexible Advantage”, which gives you a credit rating of 550 and more flexibility if you have recently gone into bankruptcy, foreclosure, or have a history of late payments.

Carrington Mortgage Services also provides regular loans, but with higher credit rating requirements. The lender is available in all states with the exception of Massachusetts and North Dakota, but it only has a few regular offices in six states. Another drawback: the lender does not offer pre-approval online to borrowers – you need to call to initiate pre-approval and apply.

Good mortgage

Goodmortgage is a full service mortgage lender affiliated with First Guaranty Mortgage Corporation. In addition to regular and government loans, the lender offers Fannie Mae HomeReady and Freddie Mac Home Possible loans, which allow you to create a co-borrower to help borrowers with lower credit levels qualify.

Goodmortgage has several benefits for all borrowers, including fast, free quotes and relatively quick closing. The lender is available in most states (not Hawaii and New York) and there are branches everywhere.

In the Disadvantages column, Goodmortgage does not publish its lender commissions and does not provide immediate online pre-approval, so you will have to speak with a loan officer to compare this lender’s offerings to others.

Home loan in angel oak

Angel Oak Home Loans is a full service direct and retail mortgage lender offering both regular and unqualified (unqualified) loans. Its products for borrowers with low or bad credit history include:

  • FHA loans
  • VA credits
  • Qualifying asset loans for borrowers with assets (such as bank accounts or stocks) instead of qualifying employment or income data
  • Portfolio Select loans for borrowers who have gone through bankruptcy or foreclosure (or on a case instead of foreclosure or sale without foreclosure)
  • Large loans without QM

Apart from these solutions, Angel Oak Home Loans also offers USDA loans and mortgages for investors, as well as mortgages for self-employed borrowers (bank statement loans) who may not qualify for a loan in the traditional way.

Angel Oak Home Loans is licensed in 29 states, mainly in the South and parts of the Midwest and West. The lender is currently not working in the northeast. In addition, there is limited information available to the public about commissions or rates of lenders, but you can fill out the form to get a quote for the rate online. Be sure to ask for details of fees when applying.

Freedom mortgage

Known for its specialization in VA loans, Freedom Mortgage is a national mortgage lender with approximately 100 branches and a solid online presence. It boasts several types of mortgages, including products for low credit borrowers such as:

  • FHA loans (minimum credit rating 540)
  • VA Credits (minimum credit rating from 580 points for VA IRRRL)
  • USDA loans

Freedom Mortgage also offers regular loans and large loans, although higher credit scores are required to qualify. If you are currently a Freedom Mortgage customer, you have access to benefits such as matching rates and closing guarantees, and you can easily view current interest rates online.

However, you will not find available information on lender fees or other loan costs, and the application process is limited to a phone call or a visit to a branch in person.

Can I get approved for a mortgage with a bad credit history?

You can apply for a mortgage even if you have bad, low or bad credit. In fact, the US Department of Housing and Urban Development (HUD) reports that the share of mortgages provided to borrowers with a credit rating of less than 620 has been growing steadily in recent years.

You can also improve your chances of getting mortgage approved by applying with co-borrower or a reputable co-author. Note that the co-borrower owns the property and the co-owner does not, so the latter option may be the best option if you just want to improve your credit profile.

What type of mortgage can I qualify for with a bad credit history?

The types of mortgages to consider if you have bad credit include:

  • FHA loans
  • VA credits
  • USDA loans
  • Unqualified mortgage (no QM)

Be wary of mortgage products that advertise “guaranteed approval” without credit checks, or other offers that are too good to be true. Most likely, these are intruders, and this path could potentially do more damage to your reputation.

What is the lowest credit rating required for a mortgage?

The lowest credit rating required to obtain a mortgage depends on the loan program and the lender. Conventional loans usually have a minimum credit rating of 620, but borrowers with higher credit ratings tend to receive higher rates. FHA, VA and USDA loans have lower minimum credit score requirements than regular loans and may make more sense to you if your credit needs improvement.

How to improve your credit score

In general, the lower your credit rating, the more likely you are to get a higher mortgage interest rate and pay higher finance costs. This is why it is better work to improve your credit rating before applying for a mortgage, even if you have had serious problems in the past. Here are some tips:

  1. Review your three credit reports from the credit bureau for free at… If you notice any errors or inaccuracies, please contact the agency as soon as possible so that you can quickly correct them.
  2. Pay all bills on time and in full if possible.
  3. While it might be tempting to block access entirely, close credit cards with caution. Your credit score may drop if you close your account. It’s better to just not use the card or use it sparingly and return it quickly.
  4. If your credit report is small, ask a family member or friend to add you as an authorized user to their existing credit card. This can help build your credit history.
  5. Do not apply for a new loan too often, especially before applying for a mortgage and during the loan underwriting process.
  6. Sign up for Experian Boost or UltraFICO. These free programs track your bill payment history and your banking information accordingly, which can help improve your credit score.
  7. If you need more help, consider consulting with a credit counseling organization. Just beware of lenders who often give bad advice but pose as reputable credit counselors.

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