How to Get a Mortgage with a Low Credit Score

July 27, 2011 30 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I say somewhere because there are always different numbers being cited by different sources, and the data is often outdated.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.

  5. Eric November 11, 2015 at 4:00 pm -

    Hi Colin, I was wondering what I am up against in the spring. I plan on marketing my house in the spring to buy another one that is a bit smaller and more conducive commute wise. However, we did have a loan modification back in 2013. Is it true that you need so many payments made to the lender before you’re eligible to apply for another? My credit is somewhere in the “mid 6’s”. My job is stable, and my income has actually increased by about five dollars an hour more than when I bought this house. Is there anything that I can “expect”, and is there a certain number of payments that I have to make before I’m eligible for a new loan? I’m only asking this, because The lender that got me into this house told me that. But I never got a second opinion. Is this true? I will also have equity in this home, when I do sell. Thanks and advance, I enjoyed/found your article interesting.

    Actually to correct the dates, we resumed making payments with the new loan modification in the spring of 2013. The mortgage company had taken several months, as you probably already know, to get the ball finally rolling.

  6. Colin Robertson November 19, 2015 at 10:01 am -


    There might be a 24-month period to make payments on the loan mod…check your paperwork and/or ask those you worked with to be sure so there aren’t any hiccups. You’ll likely get a pre-approval before shopping for house so you’ll know better what your up against. If you make the new home purchase contingent on the sale of the old home it’ll probably make things more difficult because sellers would favor someone who doesn’t need to sell before buying. Additionally, your credit might not be seen in a positive light if other potential buyers have 700 scores. Ultimately you want to limit the uncertainties as best you can to get your offer accepted (and offer more than others if you’re willing to). Good luck.

  7. brian February 16, 2016 at 11:48 am -

    i would like to purchase a $190K home with $150K down payment–my credit score has taken a hit (601) due to elder care for mother with alzheimers–i have repaired my credit to date diligently—is it possible to qualify for the $40K mortgage?? and, what do you suggest? thank you!

  8. Colin Robertson February 16, 2016 at 5:04 pm -


    It’s possible, but you may want to improve your credit score first. Aiming for 620+ is a good near-term goal to widen your loan options. Also note that getting a mortgage as small as $40k could present some issues. Most lenders want to make bigger loans.

  9. Alan March 1, 2016 at 11:09 pm -

    Just go to a finance company like One Main Financial. Companies like them will do no credit check loans if you have 50 percent down

  10. frank maltese April 7, 2016 at 8:00 am -


  11. Sally April 10, 2016 at 12:07 pm -

    I will be inheriting the family home of which my husband and I along with our two kids moved into 18 years ago to help my mom from being alone and now being elderly. Being that she is now 93 and her health understandably is declining, I am looking at the future with having to pay back my siblings their portion of the home once all is said and done. At this time, we anticipate it to be around 525,000 that I will need to seek in getting a loan. I have been at my current job for a year. My husband has been in his main job for over 15 years. Our credit is not great. Mine is around 620. Our income is estimated at 106,000 annually. Do you foresee a problem in getting a loan? Our tax/finance person wants me to wait until it is in my name before we go out and get a loan. I am extremely nervous and my family does not want me to be in a bad financial position.

  12. Colin Robertson April 18, 2016 at 10:45 am -


    You may first want to consult with some brokers to see what you qualify for, and if it makes more sense to qualify with just your husband on the loan if he has better credit than you and can still qualify. Whether it’s a good idea for you to take on the house on your own and a big loan to boot is another question.

  13. Larry July 12, 2016 at 8:23 pm -

    Hey made some bad decisions my score 415 if i put 20 30 % on 75000 could I get approved stable job been same job for 11 years

  14. Colin Robertson July 13, 2016 at 8:06 am -


    That might be a tough one – probably better off fixing your credit first and then applying when you have decent loan/lender options.

  15. Ebon Geemes October 7, 2016 at 1:48 pm -

    Hey we are looking to buy a home, we have a cosigner with i credit score in the high 700s. my wife and mine are in the mid 500s. Is it possible for us to get a loan?

  16. Colin Robertson October 11, 2016 at 8:02 am -


    Possibly, but you may want to work on your credit first to expand your options and improve your chances of approval. The co-signer won’t change the fact that your credit is in the 500s, they would just add to your income/assets, etc.

  17. Jason Dennis January 21, 2017 at 10:29 am -

    Good afternoon. I have a question and if someone could help me I’d be very appreciative. I have a credit score of a 552 😥 But the contributing factors that are killing me are bologna. Every week my child support comes out of my pay check and it is received at child support office when it should , so the first day of the month it’s logged in and it shows that it is payed on the first and then every month on the 16th they report it as late? It keeps my score down besides the fact that I have a $25 collection account that I’m scared to pay because it’s from 2013 and if I pay it will it stay on my credit somehow. I have one hard inquiry and that’s it. I have been at my place of employment for over a year, make great money and have no other debt besides my child support. Will he be hard for me to get a $89,000 mortgage I just don’t want to embarrass myself. Thank you in advance.

  18. Colin Robertson January 24, 2017 at 10:03 pm -


    Paid collections shouldn’t stay on your credit report any longer than unpaid ones, per the credit bureaus. May also want to look into disputing it to get it removed entirely, that generally boosts scores a lot. As for the late payments for child support, you could inquire about why they’re reporting it as late, and if it’s an error, also dispute those and get them removed. If everything gets removed your scores could be significantly higher.

  19. Monique March 18, 2017 at 8:38 pm -

    Hello, Im wondering……if realistically we will be able to start the home buying process in May,…Okay in late Feb we reached out to a loan person and they pulled my partners credit. it was 541 he had a few bills in collection and a student loan that was in garnishment…. Since we have reached out and settled everything. Now we are waiting for the mailing of proof that accounts are paid and settled now with the student loan we were able to come to a settlement where they would take part of his tax return. My question is how long will this take to reflect on his credit score so that he can apply for a home loan…. at the moment he is salary at 50,000 a yr and he also has a trust which he receives a check every 3 months for the interest it makes. I want to know if this is worth working towards and possible to reach by my time line or needing to know if I need to look at a rent to own type option … thank you so much for your time

  20. Colin Robertson March 19, 2017 at 12:19 pm -


    It sounds like there were some big issues with his credit that might be resolved now…but as you indicated, it takes time for changes to reflect in credit scores. And it’s really hard to say how quickly things will change because everyone has a unique credit history. But it’s quite possible he could see a jump to 600+ if all goes right…and there are options like FHA for lower scores. May want to use a free service like Credit Karma to monitor progress in the meantime. Good luck!

  21. Christine Morgan May 16, 2017 at 4:48 pm -

    Hello my name is Christine i want to buy a home in pa, my credit score is 460 my husband lost his job, i work my income is 2000 a month can u help?

  22. Colin Robertson May 20, 2017 at 7:05 am -


    That might be tough with a score that low…the lowest I’ve seen approved has been in the 500s. It might make sense to work on your credit first, which would expand your loan options and ideally lower your mortgage rate.

  23. Megan July 13, 2017 at 8:30 am -

    My credit score is 585, my husbands is 790. We are looking at a $350,000 house with a down payment of $135,000. Would we qualify for a mortgage?

  24. Colin Robertson July 13, 2017 at 2:48 pm -


    Might want to look at just him on the mortgage if you can still qualify without your income because your low credit score will probably make it a lot more difficult. Plus a higher score can equate to a better rate.

  25. Gary Douglas August 11, 2017 at 11:53 am -

    My wife and i have a home in Maple Valley, WA. The value of the home is $343.000. At the moment her son is living in the home and is taking care of his mother in law with late stages of Alzheimers. We are looking for loan of $200.000.00 purchase a new home here in Arizona and pay off all of our debts. when her son is no longer taking care of his mother in law we will put the house for sale and pay off the loan. we are thinking less than a year to put the house on the market. We had a great credit score of 735 until last Oct. when I had an accident and had to buy an other van for work and my wife had some large unexpected medical mine is at around 600. and my wife is at 635. I think I can have them up to over 650 by the end of Sept. Let me know if some one can help us
    Thanks Gary Douglas

  26. Colin Robertson August 11, 2017 at 12:45 pm -


    If you can get your scores above 620, there should be plenty of mortgage options available, it’s just that the interest rate can be a bit higher to compensate for the risk. Of course, you can always secure a mortgage, then refinance to a lower rate once your credit scores improve, assuming rates don’t head much higher during that time.

  27. Sam October 15, 2017 at 12:46 am -

    Hi Collin,

    Myself and my Fiancé are currently working to raise our credit scores ( high 400-500), but we both have new jobs. (me-8 months, him- 5 months.) we are trying to save up $5k as a down payment, but I am worried we will still not be approved and we cannot take any more time- we are working with a 6-7(max) time limit. Any advice at all would be extremely helpful!


  28. Colin Robertson October 16, 2017 at 3:02 pm -


    It sounds like you’ve got two things working against you – very low credit scores and short employment history. Together, it might be difficult to get approved for a mortgage, though it depends why your employment history is short and also if the new jobs are in the same field as prior jobs. As far as your credit scores go, same thing. Why are they so low? Can they be improved in a short period of time? If so, you might be in luck, but there are a lot of unanswered questions here. You may want to speak with a lender or broker to see if you can get pre-qualified or at least get a better idea of your approval odds once you make some strides in the right direction. Good luck!

  29. Adam Looman November 10, 2017 at 1:15 pm -

    i have a low score of 505 mid of 515 and my highest of 550 i have an opportunity to get my first home at 92000 what chances do i have at securing a loan in California

  30. Colin Robertson November 10, 2017 at 4:09 pm -


    There might be some lenders willing to go that low, but getting all 3 scores above at least 550 will likely open a lot more doors. So you may want to see why your scores are low and determine what you do relatively quickly to at least get them another notch higher. Good luck!

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