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Hal Bundrick, CFP® · Senior Writer Updated Mon, December 1, 2025 at 7:00 PM GMT+8 A poor credit score can make many financial transactions more difficult and expensive. However, with the right loan product and a knowledgeable mortgage lender, you probably have more mortgage options with a bad credit score than you’d imagine. Here are our top choices for mortgage lenders for borrowers with bad credit in December 2025.
The best mortgage lenders for bad credit: December 2025
Best for FHA loans for bad-credit borrowers: PNC Bank
Why PNC mortgages stand out: PNC is one of the best mortgage lenders out there for FHA loans, the leading loan choice for borrowers with lower credit scores.
PNC mortgage details
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Availability: All 50 states and Washington, D.C.
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Types of low-credit-score loans: FHA, VA, and USDA.
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Minimum credit scores: 600 for FHA, VA, and USDA loans.
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Minimum down payments: 3.5% for FHA, 0% for VA, and 0% for USDA loans.
Pros
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Not only is PNC a leading national FHA lender, it super-serves eligible households with grants from $10,000 to $15,000 that can be applied to FHA closing costs.
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PNC makes getting a sample mortgage rate simple and useful. All you have to provide is a little information, and the results are not dependent on contact from a mortgage rep.
Cons
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PNC's minimum credit score of 600 for an FHA loan is still relatively low, but it’s higher than the 580 minimum the FHA requires with a 3.5% down payment. Some lenders allow a FICO 500 with a 10% down payment.
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PNC offered near-median mortgage rates to borrowers in 2025. Not high, but just run-of-the-mill.
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Ranks well below average for customer satisfaction according to the 2025 J.D. Power mortgage originator survey.
Up Next
Best for military-connected bad-credit borrowers: Pennymac
Why Pennymac mortgages stand out: A top-five lender of VA loans by volume, Pennymac's low credit score requirement makes it even more competitive.
Pennymac mortgage details
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Availability: All 50 states and Washington, D.C.
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Types of low-credit-score loans: FHA, VA, and USDA.
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Minimum credit scores: 580 for FHA, 580 for VA purchase, 620 for VA cash-out refinances, no minimum for VA IRRLs, and 580 for USDA loans.
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Minimum down payments: 3.5% for FHA, 0% for VA, and 0% for USDA loans.
Pros
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The VA doesn’t set a minimum credit score for VA loans, but mortgage lenders do. Of the VA lenders we've reviewed, Pennymac has one of the lowest minimum credit requirements.
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Pennymac offers a 1% buydown to reduce your interest rate for the first year of your loan, in addition to a $1,000 closing bonus.
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With outstanding educational resources, it earns our highest rating in our Online Features category.
Cons
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Pennymac offered below-average interest rates on loans issued in 2024. However, overall loan costs were much higher than average.
Best for bad-credit borrowers with high debt levels: Rate
Why Rate mortgages stand out: Allowing a slightly higher debt-to-income ratio than other lenders in this category, Rate (previously Guaranteed Rate) gives a break to modest-income households.
Rate mortgage details
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Availability: All 50 states and Washington, D.C.
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Types of low-credit-score loans: FHA, VA, USDA, and non-qualified mortgages.
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Minimum credit scores: 550 for FHA, no minimum for VA, 620 for USDA, and not specified for non-qualified loans.
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Minimum down payments: 3.5% for FHA, 0% for VA, 0% for USDA, and not specified for non-qualified loans.
Pros
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In 2024, Rate allowed the highest median debt-to-income ratio (46%) among Yahoo Finance's best-rated FHA lenders. That debt flexibility gives borrowers more leeway.
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For face-to-face service, Rate has hundreds of branch locations.
Cons
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According to a Yahoo Finance analysis, Rate offered higher-than-median interest rates and loan costs to borrowers in 2024.
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Rate has a below-average score for customer satisfaction, according to J.D. Power.
Best for bad-credit borrowers looking for alternative credit: Guild Mortgage
Why Guild Mortgage stands out: Prospective home buyers without a credit score or with a thin credit file may qualify with rent, utilities, and car insurance payment histories.
Guild Mortgage details
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Availability: 49 states (excluding New York) and Washington, D.C.
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Types of low-credit-score loans: FHA, VA, USDA, and the Complete Rate program.
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Minimum credit scores: 540 for FHA, 540 for VA, 540 for USDA, and no credit score for the Complete Rate program.
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Minimum down payments: 3.5% for FHA, 0% for VA, 0% for USDA, and varied by loan type for the Complete Rate program.
Pros
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Guild accepts alternative forms of credit from home buyers who don’t have a credit score. The Complete Rate program uses a review of bank deposits and payment histories from rent, car insurance, and utilities.
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The Complete Rate program applies to multiple types of mortgages, including FHA, VA, and USDA loans.
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The MyPath2Own program helps first-time home buyers who can't yet qualify to buy because of credit or debt issues become "mortgage ready" with education and down payment assistance.
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Guild Mortgage has strong customer satisfaction, with an above-average rating by J.D. Power.
Cons
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Guild offered below-median interest rates and well-above-median loan costs to borrowers in 2024.
Best for renters with bad credit looking to buy: Rocket Mortgage
Why Rocket Mortgages stand out: Always an innovator, Rocket's new RentRewards program provides a financial lift to renters looking to buy.
Rocket Mortgage details
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Availability: All 50 states and Washington, D.C.
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Types of low-credit-score loans: FHA and VA.
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Minimum credit scores: 580 for FHA, and 580 for VA loans.
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Minimum down payments: 3.5% for FHA, and 0% for VA loans.
Pros
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Rocket Mortgage's RentRewards program offers savings up to $5,000 on closing costs, based on 10% of the annual rent you pay.
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Rocket is straightforward about the credit scores it accepts for each type of mortgage loan. Some lenders don't even disclose the credit scores they are willing to consider.
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Rocket ranks above average in customer satisfaction, according to the latest J.D. Power Mortgage Origination Satisfaction Study.
Cons
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In 2024, Rocket offered median interest rates but much higher-than-median loan costs.
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Sample mortgage rates are reduced with up to two discount points.
Read our complete Rocket Mortgage review.
Best for bad-credit borrowers with foreclosures or bankruptcies: New American Funding
Why New American Funding stands out: New American Funding caters to underserved households. One major way it does this is by offering non-qualified mortgages to borrowers with histories of foreclosures or bankruptcies, events that can bring down your score for years.
New American Funding mortgage details
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Availability: All 50 states, Washington, D.C., and Puerto Rico.
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Types of low-credit-score loans: FHA, VA, USDA, and non-qualified mortgages.
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Minimum credit scores: 580 for FHA, 580 for VA, 580 for USDA, and 620 for non-qualified mortgages.
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Minimum down payments: 3.5% for FHA, 0% for VA, 0% USDA, and unspecified for non-qualified mortgages.
Pros
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NAF uses non-qualified mortgages to help borrowers with recent foreclosures or bankruptcies secure a mortgage.
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The lender sponsors Black and Latino programs to encourage and facilitate homeownership.
Cons
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Advertising rates are impressively low when compared to market averages. We found the reason why: The website displays mortgage rates that are lowered with three discount points. Discount points should be a borrower's option, not a lender's promotion.
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In an article on qualifying for a loan, an NAF representative says, "If you have a lower credit score, try first to get over 580, which is the bare minimum for an FHA loan." That may be the case with New American Funding, but some lenders accept a FICO 500 with a 10% down payment on an FHA loan.
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NAF ranks below average in customer satisfaction, according to J.D. Power.
What credit score do you need to buy a house?
The very minimum credit score to buy a house is a FICO 500. That's for an FHA loan with 10% down. If you can only put together a 3.5% down payment with an FHA loan, you'll need a 580 or higher. To have more loan options and perhaps a better mortgage rate, a credit score of 620 is required.
Types of mortgage loans for poor credit
FHA loans
For most Americans of modest means, the best loan program is a mortgage insured by the FHA. With easier credit hurdles and built-in low down payments, FHA loans have helped millions of borrowers with credit issues buy a home.
VA loans
If you have a military connection, you should look into a VA mortgage. Backed by the Department of Veterans Affairs, VA loans usually require no down payment and have flexible credit qualifications.
USDA loans
USDA loans can be a good choice for aspiring homeowners with bad credit who are looking in rural and suburban areas. USDA loans are aimed at low- and moderate-income households and have lenient credit score minimums.
Tips for improving your credit score
It takes time to improve your credit score, so there are no shortcuts. Some tried-and-true methods include:
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Reduce the debt you owe. Aim to use no more than 30% of your available limit on credit cards.
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Pay on time; in fact, pay more often. Making more than one payment a month on your debt may seem impossible, but even if you pay the same amount but make one payment early and another on time, you'll reduce your balance faster and pay less interest.
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Don't apply for any new accounts. Each credit inquiry can cause your credit score to dip a little.
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Check your credit report at least annually. Look for lingering errors.
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Track your credit score. Enjoy the steady progress and gamify the process.
Mortgage lenders for low credit scores: FAQs
Why does my mortgage rate seem so high?
One downside of having bad credit: Mortgage lenders price in the risk they're taking with a higher interest rate. That's why talking to more than one lender is so important. Each mortgage provider has its own lending and pricing procedures. One lender may want your business more than another and offer you a better mortgage rate.
What is considered bad credit for a mortgage?
A score below 620 is the dividing line between a conventional loan and most government home loans. FHA loans can serve borrowers with credit scores as low as 500. The higher your score and the greater your down payment, the better your loan terms will likely be.
What is the easiest mortgage loan to get with bad credit?
The easiest mortgage to get with bad credit is an FHA loan. You can qualify with a score as low as 580 with a 3.5% down payment, or as low as 500 with 10% down.
Are there higher fees charged for mortgages issued to borrowers with bad credit?
Yes. In addition to a higher mortgage interest rate, you will likely pay more in mortgage insurance and perhaps additional closing costs.
Are there programs to help homebuyers with bad credit?
Yes. Many lenders work with state and local housing assistance programs to obtain grants, vouchers, and other concessions for borrowers with bad credit. Ask each lender you speak to how they can help you find assistance programs. You can also use this NCHSA tool to find housing assistance and finance agencies near you.
Can I buy a house with a 500 credit score?
Yes, it’s possible to buy a house with a 500 credit score. You can qualify for an FHA loan with a score as low as 500 — but you must have a 10% down payment. Otherwise, FHA loans require a 580 credit score with a 3.5% down payment.
Methodology: How we chose the best mortgage lenders for bad credit
Yahoo Finance reviews mortgage lenders based on five primary considerations: 1) Interest rates. Using 2024 Home Mortgage Disclosure Act data from almost 5,000 mortgage companies, we analyze mortgage lenders based on issued mortgage rates below or above the annual median of reporting lenders. 2) Affordability. A measure of loan product availability and the willingness of a lender to offer government-backed loans, low down payments, down payment assistance, and consideration of nontraditional credit. 3) Loan costs. HMDA data is again analyzed, and total loan costs are compared to the annual median. 4) Rate transparency. The ability of a website user to obtain a mortgage interest rate estimate. We also consider whether rates are enhanced with discount points or high credit score requirements, disclaimers revealing rate assumptions, sample advertised rates, and whether adjustable or no discount point rate estimates are available. 5) Online features. An analysis of the educational material, calculators, and additional resources available to users.
Advertisers or sponsorships do not influence ratings.
Editorial disclosure for mortgages:
The information in this article has not been reviewed or approved by any advertiser. The details on financial products, including interest rates and fees, are accurate as of the publish date. All products or services are presented without warranty. Check the lender's website for the most current information. This site doesn't include all currently available offers.
Laura Grace Tarpley edited this article.
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