On this page
- Loan options for a mortgage with bad credit
- What a low credit score costs you
- What lenders check besides your score
- Other ways to qualify for a mortgage with bad credit
- How to raise your score before you apply
- Avoid “guaranteed approval” bad credit mortgage offers
- Mortgage with bad credit FAQ
- Your next step
Yes, you can get a mortgage with bad credit. FHA insures loans for borrowers with scores as low as 500 with 10% down, or 580 with 3.5% down. VA and USDA set no program minimum score, and Fannie Mae’s automated underwriting system has had no minimum score since November 16, 2025. However, each lender sets its own floor, and a low score means a higher rate and higher costs.
“Bad credit” usually means a score in FICO’s two lowest bands. According to myFICO, a score below 580 is “poor” and 580 to 669 is “fair.” Mortgage lenders also pull older, mortgage-specific FICO versions, so the score they see can differ from the one in your banking app.
This guide covers which loans work with a low score, what it costs, the waiting periods after bankruptcy or foreclosure, and how to improve your odds.
Loan options for a mortgage with bad credit
The table below shows each program’s own rules. However, lenders often add stricter requirements, called overlays. For the full list of minimums and what counts as a good score, see what credit score you need to buy a house.
| Loan type | Program minimum score | Minimum down payment | Notes |
|---|---|---|---|
| FHA | 580, or 500 with 10% down | 3.5% (10% below 580) | Debt limits are tighter below 580 on manually underwritten loans |
| VA | None set by VA | 0% | For eligible veterans and service members; lenders set their own minimum |
| USDA | None set by USDA | 0% | Rural areas and income limits; the automated system decides which scores it accepts |
| Conventional (Fannie Mae) | None in DU; 620 for manually underwritten fixed-rate loans | 3% on some fixed-rate loans | Low scores pay higher pricing fees and PMI |
| Non-QM | Set by each lender | Often 10% or more | Not backed by a government agency or Fannie Mae |
FHA loans: 580 with 3.5% down, 500 with 10% down
FHA is the most common route for a low credit score mortgage. Under HUD Handbook 4000.1, section II.A.2.b, a borrower with a score of 580 or higher can finance up to 96.5% of the home’s value. From 500 to 579, however, the maximum loan-to-value ratio (LTV) drops to 90%, so you need 10% down. Below 500, FHA will not insure the loan.
On the $417,500 national median existing-home price for September 2026 (National Association of Realtors), that is $14,612.50 down at 3.5%. At 10%, it is $41,750.
FHA uses your middle score when three are reported, or the lower of two. When more than one borrower applies, it takes the lowest of those scores. Manual underwriting also brings tighter limits. When a person reviews the file instead of FHA’s automated system, a score below 580 caps your ratios at 31% of income for housing and 43% for all debts. In that case, no compensating factors can stretch them (4000.1 II.A.5.d.viii).
Even so, many FHA lenders set their own floor above 580. So if one lender turns you down, another may not. Read more on FHA loans for buyers with scores from 500 to 579 and the full FHA loan guidelines.
VA loans: no VA minimum score
VA Pamphlet 26-7, chapter 4, states plainly: “VA does not have a minimum credit score requirement.” Instead, the lender judges whether you are a satisfactory credit risk from your overall payment pattern. Still, most lenders set a minimum of their own, so ask each lender for its number. See our guide to VA home loans for eligibility.
USDA loans: no program minimum score
USDA’s guaranteed loan program “has no credit score requirements,” according to USDA Rural Development. Instead, its automated system (GUS) decides which score it will accept. When GUS refers a file for manual review, the lender needs more documentation. In addition, at least one applicant needs a validated score backed by two credit accounts open for 12 months (HB-1-3555, chapter 10). Learn more about USDA home loans.
Conventional loans: no DU minimum, but pricing follows your score
Fannie Mae’s Selling Guide B3-5.1-01 says no minimum score applies to loans run through Desktop Underwriter (DU), because DU weighs the full credit report instead. Manually underwritten loans still need a 620 score for fixed-rate loans and 640 for adjustable-rate mortgages (ARMs). Many lenders also keep a 620 or higher floor as an overlay.
The bigger hurdle is cost. Fannie Mae charges loan-level price adjustments (LLPAs) by score and LTV, and lenders usually pass them on as a higher rate or upfront points. Private mortgage insurance (PMI) rates also vary by credit score, according to the CFPB.
Non-QM loans
Some lenders make loans outside agency rules, often called non-qualified mortgages. They may approve a recent bankruptcy or a very low score. In exchange, expect larger down payments and higher rates than on an FHA loan, so get an FHA quote first. Read more on non-QM loans.
What a low credit score costs you
A lower score almost always means a higher interest rate. Freddie Mac’s weekly survey put the average 30-year fixed rate at 7.24% on October 29, 2026. Because that is an average, a borrower in the poor or fair range should expect higher quotes. Check current mortgage rates and compare at least three lenders on the same day.
On a conventional loan, the LLPA shows the gap in dollars. For example, take Fannie Mae’s LLPA Matrix updated September 30, 2026. This hypothetical assumes a $417,500 purchase with 10% down, a $375,750 loan and a term over 15 years.
| Representative credit score | LLPA at 85.01%–90% LTV | Cost on a $375,750 loan |
|---|---|---|
| 780 or higher | 0.250% | $939.38 |
| 680 to 699 | 1.500% | $5,636.25 |
| 639 or lower | 2.625% | $9,863.44 |
So a borrower at 639 or below carries $8,924.06 more in LLPAs than one at 780. That amount shows up as points or a higher rate, and it comes on top of a higher PMI premium. The example excludes taxes, insurance and PMI.
FHA works differently. Its annual mortgage insurance premium depends on loan amount, LTV and term, not your score (HUD Mortgagee Letter 2023-05). For instance, it is 0.55% a year on most 30-year loans with less than 5% down. As a result, FHA can cost less than conventional for a buyer with a low score. Your score still affects the rate an FHA lender quotes, though.
What lenders check besides your score
A score is a summary, so underwriters also read the report itself. They look hardest at the last one to two years. For example, FHA’s handbook singles out collections, charge-offs, judgments and accounts with late payments in the previous 24 months. Similarly, VA lenders must verify your most recent 24 months of rent or mortgage payments.
Court judgments matter, too. FHA requires them paid off before closing, unless you have a payment plan with at least three months of on-time payments.
Bankruptcy and foreclosure also bring waiting periods. These are the standard periods for each program.
| Event | FHA | VA | USDA | Conventional (Fannie Mae) |
|---|---|---|---|---|
| Chapter 7 bankruptcy discharge | 2 years | 2 years | 3 years | 4 years |
| Foreclosure | 3 years | 2 years | 3 years | 7 years |
Sources: HUD 4000.1 II.A.5.a; VA Pamphlet 26-7, chapter 4; HB-1-3555, chapter 10; Fannie Mae Selling Guide B3-5.3-07.
Extenuating circumstances can shorten several of these periods. Examples include a serious illness or the death of a wage earner. With documentation, FHA can accept a Chapter 7 discharge after 12 months, while Fannie Mae can accept one after two years. Fannie Mae also allows three years after a foreclosure, with extra conditions. However, FHA does not treat divorce as an extenuating circumstance.
In either case, you will usually explain the event in writing. Here is how to write a letter of explanation. For more detail, see buying a home after bankruptcy and buying a house after foreclosure.
Other ways to qualify for a mortgage with bad credit
A low score is only one factor, so you can offset it in several ways.
- Put more down. A larger down payment lowers the lender’s risk and, on conventional loans, the LLPA. See how much to put down on a house.
- Lower your debt-to-income ratio. Paying off a car loan or card balance can bring you under program limits. Here is how lenders figure debt-to-income ratio.
- Build cash reserves. FHA lists verified reserves as a compensating factor that can justify higher ratios when your score is 580 or more.
- Add a co-borrower. A second borrower adds income, but it rarely lifts the score used. FHA uses the lowest score among all borrowers, and Fannie Mae prices on the lowest one. Fannie Mae’s manual underwriting is an exception, because it averages the borrowers’ middle scores for eligibility.
- Use nontraditional credit if you have no score. FHA, VA, USDA and Fannie Mae all allow a credit history built from rent, utilities and similar payments in some cases. These files generally require manual underwriting.
How to raise your score before you apply
Small, steady changes help most. No one can promise a set number of points, and a credit repair company cannot either. Start with the steps below, then use these ways to improve your credit for a mortgage for more detail.
- Pull all three reports. The CFPB notes you can get free reports from Equifax, Experian and TransUnion once a week at AnnualCreditReport.com.
- Dispute errors. File with the credit bureau and with the company that reported the item. CFPB guidance says the reporting company generally must respond within 30 days.
- Pay every bill on time. Recent late payments weigh more than old ones.
- Pay down card balances. Lower balances relative to your limits usually help your score.
- Avoid new credit until after closing. New accounts and inquiries can lower your score and raise your debt ratio.
- Ask about a rapid rescore. After you fix an error, some lenders can request an updated score in days rather than weeks.
Avoid “guaranteed approval” bad credit mortgage offers
Ads that say “bad credit, no problem, guaranteed” are a warning sign. According to the Federal Trade Commission, legitimate lenders “won’t promise or guarantee you a loan or credit before you apply.” Real lenders may charge an application or appraisal fee. But a lender that demands an upfront fee to guarantee approval is likely a scam.
Many searches also ask about 100% financing with bad credit. Only VA and USDA lend the full price with no down payment. Both let you finance their fee: the VA funding fee (2.15% for first use with less than 5% down in 2026) and USDA’s 1% upfront guarantee fee. Even so, a lender must still approve your credit. Learn more about zero-down home loans.
Mortgage with bad credit FAQ
Can I get a mortgage with bad credit?
Yes. FHA insures loans with scores down to 500, while VA and USDA set no program minimum. Approval depends on finding a lender whose own minimum you meet, plus acceptable income, debts and recent payment history.
What is the lowest credit score to buy a house?
FHA’s floor is 500, with 10% down. VA, USDA and Fannie Mae’s DU have no program minimum, so in practice the lowest score is whatever a lender accepts. Many lenders set their floor at 580 or higher.
Can I get a mortgage with a 500 credit score?
Possibly, through FHA with at least 10% down. Because few lenders approve scores that low, expect to apply with several. A manually underwritten FHA file with a score under 580 is also capped at 31% and 43% debt ratios.
Can I get a mortgage with no down payment and bad credit?
Only VA and USDA loans offer no down payment, and neither program sets a minimum score. Still, the lender must approve your credit, and most set their own minimum.
How long after bankruptcy can I get a mortgage?
After a Chapter 7 discharge, the standard wait is 2 years for FHA and VA, 3 years for USDA and 4 years for Fannie Mae. Documented extenuating circumstances can shorten some of these periods.
Do mortgage lenders accept VantageScore?
Increasingly, yes. Fannie Mae and Freddie Mac began accepting VantageScore 4.0 in 2026, and all approved lenders could use it from September 9, 2026. FHA will accept VantageScore 4.0 and FICO 10T for case numbers from January 1, 2027. Even so, each lender chooses which score it pulls.
Will a co-signer help me get a mortgage with bad credit?
A co-signer or co-borrower can add income and lower your debt ratio. However, FHA and Fannie Mae generally use the lowest score among borrowers for eligibility or pricing. So a co-signer usually helps with income more than with your score.
Your next step
A low score narrows your options, but it rarely closes them. FHA is the usual starting point, VA and USDA fit if you are eligible, and conventional works best once your score rises. Before you apply, pull your three free reports and fix any errors. Then ask two or three lenders for their minimum score and a quote on the same day.
