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Best Low Credit Score Mortgage Lenders In 2021

Best Low Credit Score Mortgage Lenders In 2021
Written by Publishing Team

If you have less than perfect credit and are looking to buy a home or refinance your mortgage, there are low credit score mortgage lenders with options for you. Bankrate has made it easy to find lenders that offer loans for bad credit, based on criteria such as minimum credit score requirements, the widest range of loan programs for borrowers with low credit and down payment assistance. Here is our guide to the best mortgage lenders for borrowers with a low credit score in 2021.


To select the best mortgage lenders for borrowers with a low credit score, the bank evaluated lenders based on several criteria, including the availability of low credit or low repayment loan programs; Credit score requirements and flexible underwriting.

Best Mortgage Lenders for Borrowers with Low or Bad Credit

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 praised by borrowers as one of the best mortgage lenders for those with less than desirable credit. Underlining this reputation is New American Funding’s suite of loan products, which include:

  • Conventional loans (minimum credit score of 620)
  • FHA loans (minimum 500 credit score)
  • VA loans (no minimum credit score requirement)
  • USDA Loans (minimum 580 credit score)
  • I Can Mortgages with flexible loan terms (minimum credit score of 620)
  • Reverse Mortgages (No minimum credit score requirement)

Notably, new US financing can help qualify credit-free borrowers for certain types of loans by looking at other information, such as payment history, rather than credit score.

New US funding is available in every state except Hawaii and New York, and branches can be found in most states. One downside is the lack of publicly available information about the fees a lender may charge for a loan. Be sure to ask about any fees to the lender as you consider your loan options.

Carrington Mortgage Services

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

  • Modified Mortgages (ARM)
  • FHA Loans
  • VA Loans
  • USDA Loans

Special loan programs are also available, including the Flexible Feature, which allows for a credit score as low as 550 and flexibility if you’ve recently been in bankruptcy, closed foreclosure, or have a history of late payments.

Carrington Mortgage Services offers traditional loans as well, but with higher credit score requirements. The lender is available in every state except Massachusetts and North Dakota, but has only a few brick-and-mortar locations in six states. Another drawback: the lender does not offer online pre-approval for borrowers – you will need to call to start the pre-approval and application.


Goodmortgage is a full service online mortgage lender of 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 the co-borrower to help low-credit borrowers qualify.

Goodmortgage has many perks for all borrowers, including fast quotes with no fees and relatively fast closing. The lender is available in most states (not Hawaii and New York) and there are affiliate locations throughout.

In the Disadvantages column, Goodmortgage does not make the lender’s fees public and does not offer immediate online pre-approval, so you will have to speak with a loan officer to compare an offer from this lender to others.

Angel Oak Home Loans

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

  • FHA Loans
  • VA Loans
  • Asset qualifying loans to borrowers who have assets (such as bank accounts or stocks) in lieu of employment or income terms
  • Select portfolio loans for borrowers who have had bankruptcy or foreclosure (or an instrument in place of a foreclosure or short sale)
  • Jumbo credits other than quality management

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

Angel Oak Home Loans are licensed in 29 states, and are primarily concentrated in the South and some parts of the Midwest and West. The lender is not operating in the Northeast at this time. Additionally, there is limited publicly available information about the lender’s fees or rates, but you can fill out a form to get a quote online. Be sure to ask for details about fees when applying.

freedom pledge

Known for specializing in VA loans, Freedom Mortgage is a national mortgage lender with nearly 100 affiliate sites and a strong online presence. It features several types of mortgages, including products for borrowers with low credit, such as:

  • FHA Loans (540 minimum credit score)
  • VA Loans (with a minimum 580 VA IRRRL credit score)
  • USDA Loans

Freedom Mortgage also offers both traditional and bulk loans, although higher credit scores are needed to qualify. If you’re a Freedom Mortgage customer, you can access benefits like rate matching and lockout guarantees, and you can easily view current interest rates online.

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

Can I get approved for a mortgage with bad credit?

It is possible to qualify for a mortgage even if you have bad, low or poor credit. In fact, the Department of Housing and Urban Development (HUD) reports that the share of mortgages offered to borrowers with a credit score of less than 620 has grown steadily in recent years.

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

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

Types of mortgages worth considering if you have poor credit include:

  • FHA Loans
  • VA Loans
  • USDA Loans
  • Non-qualified mortgages (other than quality management)

Be wary of mortgage products that promote “secured approval” without a credit check, or other offers with claims too good to be true. These are likely bad actors, and going this route will likely do more damage to your credit.

What is the lowest credit score required to obtain a mortgage?

The lowest credit score you need to qualify for a mortgage depends on the loan program and the lender. Conventional loans typically have a credit score of at least 620, but borrowers with higher credit scores tend to have better credit rates. FHA, FHA, and USDA loans have lower minimum credit score requirements than traditional loans, and they may make more sense for you if your credit needs improvement.

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 costs. This is why it’s best to work for a higher credit score before applying for a mortgage, even if you’ve had some serious blows in the past. Here are some tips:

  1. Review your three credit reports from credit reporting bureaus at no charge at Contact the agency as soon as possible if you notice any errors or inaccuracies so that you can resolve them quickly.
  2. Pay all of your bills on time and in full, if possible.
  3. While it may be tempting to cut off access completely, close credit cards with caution. Your credit score can drop if you close an account. It is best for you to simply not use the card, or to use it in moderation and repay it immediately.
  4. If your credit report is poor, 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. Don’t apply for new credit frequently, especially before applying for a mortgage and during the loan underwriting process.
  6. Sign up for Experian Boost or UltraFICO. These free programs take into account your bill payment history and bank statements, respectively, which can help improve your credit score.
  7. If you need more help, consider consulting a credit counseling organization. Just be wary of debt setters, who often give bad advice but are reputable credit advisors.

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