Compare the Best Mortgage Lenders for Bad Credit

Company	Min. Credit Score (Conventional)	Max. Debt-to-Income Ratio	Min. Down Payment	Average Days to Closing
Best Overall	600	~45%	3.00%	30
Best for VA Loans	620	55%	3.00%	27-42
Best Online Option	620	50%	Not disclosed	21-42
Best for Quick Closing Time	600	50%	3.50%	21

Guide for Choosing a Mortgage Lender With Bad Credit

Should You Get a Mortgage If You Have Bad Credit?

If you have bad credit, whether it makes sense to take out a mortgage is dependent on several factors. Your credit plays a big role in your ability to get a loan. If your score is too low, you may not be eligible, or you may have to accept a higher interest rate to get a mortgage. 

Another thing to consider is the cause of your low credit score. If you have a history of missed payments, your budget may be stretched too thin to afford a home, so it may make sense to hold off on buying a house right now.  Lenders will also look at your debt-to-income ratio to determine how much of a risk you are. If your debt-to-income ratio is high, it may be difficult to get approved for a mortgage.

The state of the real estate market can also impact your decision. In some cases, it may be cheaper over the long run to buy rather than rent. There are quite a few considerations to make to figure out whether buying or renting makes more sense in your area.

Improve Your Odds of Qualifying With Bad Credit

You can improve your chances of qualifying for a mortgage with these tips: 

• Save a larger down payment: Although borrowers with excellent credit may qualify for a conventional mortgage with as little as 3% down, borrowers with poor credit may need a larger down payment. To give yourself the best chance of qualifying for a loan, aim to save 10% of the home value. 
• Review your credit reports: Review your credit reports at to see if there are any errors bringing your score down. If there are, dispute them with the credit bureaus. 
• Pay down debt: You can improve your debt-to-income ratio—and your odds of getting a loan—by paying down your existing debt, such as your credit card balances. 
• Apply with a cosigner or co-mortgagor: You may be able to qualify for a mortgage if you add a cosigner to your loan application. Requesting someone to be a cosigner is a huge ask, especially when it comes to a significant purchase like a house, so make sure you can comfortably afford the loan payments before going this route. 

How to Compare Mortgage Lenders

When you’re looking for a lender, factors like APR and interest rate type are important. But if you have bad credit, you also want to think about the following to find the right lender for you: 

• Minimum credit score requirements: Credit score requirements vary by lender. While some will work with borrowers with scores in the 500s, others require scores in the good to excellent range. 
• Debt-to-income requirements: Typically, the maximum debt-to-income ratio lenders will accept is 43%. However, there are some mortgage companies that have higher DTI limits. 
• Down payment requirements: If you have bad credit, you may be required to save a larger down payment than a borrower with excellent credit. 
• Home buyer assistance programs: Many mortgage lenders have their own home buyer assistance programs. Benefits may include lower credit score requirements, lower down payment percentages, or credits toward closing costs. 

How to Apply for a Mortgage

In general, you can start the process through a mortgage lender’s website. Or if you want help navigating through the application, you can contact an agent by phone or in person at a local branch.  When you shop for a mortgage, you can often pre-qualify to get an estimate of how much home you can afford. With a mortgage pre-qualification, the lender mostly relies on self-reported information.  With a pre-approval, the lender verifies your information and performs a hard credit inquiry, so it’s more accurate than a pre-qualification.  To apply for a mortgage, you’ll need to provide information and documentation about your finances, including: 

• Recent pay stubs
• Recent tax returns
• Bank statements
• Investment account statements
• If you received a gift from a friend or relative for the down payment, a letter explaining the source of funds

Frequently Asked Questions

How We Chose the Best Mortgage Lenders for Bad Credit

Our team evaluated 45 mortgage lenders and collected nearly 1,500 data points before selecting our top choices. We weighed 15 criteria and gave a higher weight to those with a more significant impact on potential borrowers.  The top picks were selected based on factors like quality of service (weighted 50%), operational features (32%), loan types (12%), and accessibility (6%). We took into account important considerations like whether or not the lender offers jumbo loans, how many states the lender is licensed in, and what the overall customer experience is like. We also conducted a survey of 1,195 people who have taken out mortgages. We asked about customer satisfaction with various mortgage lenders, and we learned which features are most important from a customer perspective. This information helped determine weights for criteria used for scoring.

Read more in our full mortgage lender methodology.