Best Low Credit Mortgage Lenders in 2021


If you have less than perfect credit and are looking to to buy a house or refinance your mortgageThere are low credit mortgage lenders with options for you. The bank rate facilitated the find lenders who provide bad credit home loans, based on criteria such as the lowest minimum credit score requirement, the widest range of loan programs for low credit borrowers, 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 low-credit borrowers, Bankrate assessed lenders based on several criteria, including the availability of low-credit or low-down payment loan programs; flexible underwriting and credit score requirements.

The Best Mortgage Lenders for Low or Bad Credit Borrowers

New American funding

With an A + rating from the Better Business Bureau and five out of five stars on Bankrate, New American Funding is highly acclaimed by borrowers as one of the best mortgage lenders for those with less than desirable credit. New American Funding’s line of loan products, which includes:

  • Conventional loans (620 credit points minimum)
  • FHA loans (as low as 500 minimum credit points)
  • VA loans (no minimum credit score requirement)
  • USDA loans (as low as 580 minimum credit points)
  • “I CAN” mortgages with flexible loan terms (as low as 620 credit points minimum)
  • Reverse mortgages (no minimum credit score requirement)

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

New American Funding is available in all states except Hawaii and New York, and branches can be found in most. One drawback is the lack of publicly available information on the fees the lender might charge for a loan. Be sure to educate yourself about the lender’s fees when considering your loan options.

Carrington Mortgage Services

Ideal for those with poor or bad credit, Carrington Mortgage Services provides certain types of financing designed for borrowers with credit scores as low as 500, including:

  • Variable rate mortgages (ARM)
  • FHA loans
  • VA loans
  • USDA loans

Special loan programs are also available, including “Flexible Advantage,” which allows for a credit score as low as 550 and flexibility if you’ve recently suffered bankruptcy, foreclosure, or have a history of late payments.

Carrington Mortgage Services also provides conventional loans, but with a higher credit score requirement. The lender is available in all states except Massachusetts and North Dakota, but only has a handful of physical locations in six states. Another downside is that the lender does not offer borrowers online pre-approval – you will have to call to initiate pre-approval and application.


Goodmortgage is a full-service, online mortgage lender affiliated with First Guaranty Mortgage Corporation. In addition to conventional and government loans, the lender offers Fannie Mae HomeReady and Freddie Mac Home Possible loans, both of which allow a co-borrower to help low-credit borrowers qualify.

Goodmortgage offers several benefits to all borrowers, including quick, no-cost rate quotes and relatively quick closings. The lender is available in most states (not Hawaii and New York) and there are branches everywhere.

In the cons column, Goodmortgage does not publicize its lender fees or provide immediate pre-approval online, so you will need to speak to a loan officer to compare an offer from that lender to others.

Home Loans in Angel Oak

Angel Oak Home Loans is a full-service direct and retail mortgage lender offering a mix of conventional and non-qualified (non-QM) loans. Its products for low and bad credit borrowers include:

  • FHA loans
  • VA loans
  • Asset Qualifier loans for borrowers with assets (such as bank accounts or stocks) instead of terms of employment or income
  • Portfolio Select loans for borrowers with bankruptcy or foreclosure (or deed in lieu of foreclosure or short sale)
  • Jumbo loans no QM

Beyond these solutions, Angel Oak Home Loans also offers USDA loans and mortgages for investors, as well as mortgages for independent borrowers (bank statement loans) who may not qualify for a loan in the manner. traditional.

Angel Oak Home Loans is licensed in 29 states, primarily concentrated in the South and parts of the Midwest and West. The lender does not operate in the northeast at the moment. Also, there is limited information available to the public about lender fees or rates, but you can fill out a form to get a quote online. Be sure to ask for details of the fees when you apply.

Liberty mortgage

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

  • FHA loans (540 credit points minimum)
  • VA loans (as low as 580 minimum credit points for VA IRRRL)
  • USDA loans

Freedom Mortgage also offers conventional loans and jumbo loans, although higher credit scores are required to qualify. If you are a current Liberty Mortgage customer, you have access to benefits such as rate match and closing guarantees, and you can easily view current interest rates online.

However, you won’t find information about lender fees or other loan costs as readily available, and the application process is limited to a phone call or in-person visit to a branch.

Can I be approved for a mortgage with bad credit?

It is possible to qualify for a mortgage even if your credit is bad, weak, or bad. In fact, the US Department of Housing and Urban Development (HUD) reports that the share of mortgages granted to borrowers with a credit score of less than 620 has steadily increased in recent years.

You can also improve your chances of getting approved for a mortgage loan if you apply to a mortgage lender. co-borrower or co-signer who has good credit. Note that a co-borrower owns the property, but not a co-signer, so the latter may be the best option if you are just looking to give your credit profile a boost.

What Kind of Mortgage Can I Qualify For With Bad Credit?

Types of mortgages to consider if you have bad credit include:

  • FHA loans
  • VA loans
  • USDA loans
  • Unqualified mortgages (non-QM)

Beware of mortgage products that tout “guaranteed approval” without a credit check, or other offers with claims that are too good to be true. They are probably bad actors, and going down this route can potentially further damage your credit.

What is the lowest credit score required for a mortgage loan?

The lowest credit score you need to qualify for a mortgage depends on the loan program and the lender. Conventional loans generally have a minimum credit score of 620, but borrowers with higher credit scores tend to get better rates. FHA, VA, and USDA loans have lower minimum credit score requirements than conventional loans and might make more sense to you if your credit is to improve.

How to improve your credit score

In general, the lower your credit score, the more likely you are to get a higher mortgage interest rate and pay higher financing fees. This is why it is better work towards a higher credit score before you apply for a mortgage, even if you’ve had serious problems in the past. Here are a few tips:

  1. Review your three credit reports from the credit bureaus for free at Contact the agency as soon as possible if you find any errors or inaccuracies so that they can be resolved quickly.
  2. Pay all of your bills on time and in full, if possible.
  3. While it can be tempting to shut down access entirely, close credit cards with caution. Your credit score may drop if you close an account. You’d better not use the card or use it sparingly and pay it off promptly.
  4. If you have a poor credit history, ask a family member or friend to add you as an authorized user to their existing credit card. It can help you build your credit history.
  5. Don’t apply for new credit too often, especially before applying for a mortgage and during the loan application process.
  6. Sign up for the Experian Boost or UltraFICO program. These free programs take into account your bill payment history and bank details, respectively, which can help you improve your credit score.
  7. If you need more help, consider seeing a credit counseling agency. Just beware of debt settlers, who often give bad advice but masquerade as reputable credit counselors.

Learn more:


About Nereida Nystrom

Check Also

Today’s Best Mortgage and Refinance Rates for October 29, 2020

Many businesses featured on Money advertise with us. The opinions are our own, but the …

Leave a Reply

Your email address will not be published.