How to Get a Mortgage with a Low Credit Score

July 27, 2011 4 Comments »


Mortgage Q&A: “How to get a mortgage with a low credit score.”

If you’ve got a low credit score, but are determined to buy a new home (or looking to refinance your existing mortgage), you may be wondering how to get a mortgage.

First things first though – how low is your credit score? Are we talking a 660 score or a 400 credit score?

The FICO score range dips as low as 300 and rises as high as 850. The average credit score is somewhere around the high 600s to low 700s.

I say somewhere because there are always different numbers being cited by different sources, and the data is often outdated.

How Low Is Your Credit Score?

But to get back to my point, you need to assess how low your credit score is to determine your chances of getting approved for a mortgage.

In short, if you’re score is closer to the bottom of that range, your chances of landing a mortgage will become slimmer and slimmer.

Fortunately, there are options for those of us with imperfect credit, or dare I say, bad credit.

In fact, you only need a 500 credit score to get an FHA loan, which is actually a popular choice among homeowners these days for its low down payment requirement.

And a 500 credit score is pretty abysmal.

Credit Scores Below 620 Are Considered Subprime

Heck, anything below a 620 credit score is considered “subprime” by most banks.

So if your credit score is below 500, you’ve certainly made some serious financial missteps.

But keep in mind that if your credit score is below 580, you’ll need to bring in at least a 10 percent down payment to obtain an FHA loan.  You won’t be able to take advantage of their flagship 3.5 percent down loan program.

Additionally, most individual lenders require even higher credit scores for FHA loans, based on their own risk appetite.  So a 500 credit score might not actually cut it in the real world.

Recently, Carrington began accepting FICO scores as low as 550 for FHA, USDA, and VA loans, though the associated pricing hit is pretty sizable.  And they’re one of the only games in town.

Meanwhile, Fannie Mae and Freddie Mac want a minimum 620 credit score, and credit scores of 660 and up are typically required for all other conventional mortgage loans.

For jumbo mortgages, you might be looking at a minimum score of 680 or even 700, with a large down payment also a requirement.  Or a max LTV ratio of 80%.

In any case, it’s recommended that you enlist a mortgage broker, one who can shop your (more difficult) loan scenario around with multiple banks and lenders to secure financing.

You can visit your local bank as well, but chances of getting approved with a low credit score are probably pretty slim.  And having to call bank after bank can be time consuming and frustrating to say the least.

[How to get the best mortgage rate.]

Do you want a mortgage if your credit score is low?

Aside from those who absolutely need to buy/refinance, and those with no other place to turn, are you sure you want to apply for a mortgage if your credit score is shot?

Even if you do get approved, your mortgage rate will probably be much higher as a result, and you’ll likely need to come in with a large down payment to offset the risk you present to lenders.

You may be better off having someone else with excellent credit take out the loan instead, such as a spouse or parent.  Or it may be in your best interest to wait until your credit score has improved before applying for a mortgage.

It is recommended that you check your credit scores and reports long before applying for a mortgage to ensure you can actually qualify. Doing so will also give you time to fix any mistakes that may show up on your credit report, as changes take time.

In summary, keep in mind that while credit scoring is very important to mortgage lending, it is just one of the many underwriting criteria mortgage lenders look at.

Things like income, assets, and employment history can also make or break you, regardless of whether you have perfect credit or not.

See also: What credit score do I need to get a mortgage?


  1. Joanie Sheppard August 9, 2015 at 6:27 pm -

    I would really like to invest in a home and I was in a severe car accident, I do have some physical disabilities and am a beginner at all of this. I did get approved for SSD/SSI and I am currently living at my parents as they have been helping me through recent surgeries. My point here is that I do not know where to start or how to obtain any information on investing in general, but I do know I would like to get into a home and fix my credit. I know I have a lot of medical issues on my credit report as well as some bad decisions I made in the past with checks and banks, I have however, a bank account (checking and savings, and would like some advice…if you can help in any way I would appreciate it.

  2. Tina Graham August 10, 2015 at 1:58 pm -

    I am a single mother and divorce, I was in a 2 family income and now it is just me. My house did not sell, so it went into foreclosure about 1 year ago. I am renting now and the cost is to much. How can I get into a home, with a mortgage about 1,200 to 1,400 a month. My credit scores goes from 589 to 620.
    I am trying to start all over again on my own, wit my 2 children. I have been working at my job for 27 years and not planning on leaving anytime soon. I am looking for a second job part time. Can you help me.

  3. Jesse September 20, 2015 at 10:58 am -

    Hi my name is jesse im looking to buy a home in three to six months can you please touch bases with im 28 and ready in find a home to make an investment in my credit score is 518 and my occupation is nurse at citrus memorial same day surgery and avanta nursing home

  4. Colin Robertson September 22, 2015 at 12:00 pm -


    I don’t make/offer loans, but reading around my site might help you better understand the home loan process. Your credit score could definitely use some improvement. Getting it above 620 should greatly expand your options and probably help you obtain a lower mortgage rate. Perhaps determining why your score is low and then taking steps to improve it would be a good move. Good luck.

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