August 2023’s top mortgage lenders for low credit scores

August 2023's top mortgage lenders for low credit scores

The Best Mortgage Lenders for Low Credit Scores of 2023

Our experts answer readers’ home-buying questions and write unbiased product reviews (here’s how we assess mortgages). In some cases, we receive a commission from our partners; however, our opinions are our own.

Think your credit is too low to get a mortgage? You might be closer to qualifying than you think. Many lenders accept lower scores on some of their mortgages.

To find the best low credit score mortgage lenders, we looked for lenders that offer mortgages that allow scores below 620, including FHA mortgages, and have flexible credit requirements on one or more of their mortgage products. Here are the best mortgage lenders for borrowers with low credit scores.

The Best Mortgage Lenders for Low Credit Scores

Carrington Mortgage Services: Best overall

Guild Mortgage: Best for those with no credit history

New American Funding: Best for a variety of options

Rocket Mortgage: Best for an easy online experience

Citibank: Best for low down payments

CashCall Mortgage: Best for self-employed borrowers

CrossCountry Mortgage: Best for no minimum credit score

Here are the best mortgage lenders for borrowers with low credit scores.

Why You Should Trust Us: Our Expert Panel on Choosing the Best Mortgage Lender for Low Credit Scores

To help you learn more about homebuying, mortgages, and lenders, four experts weighed in:

Anthony Park – author of “How to Buy Your Perfect First Home”
Lauryn Williams – certified financial planner, founder of Worth Winning Financial Planning
Julie Aragon – mortgage broker, founder of Aragon Lending Team
Molly Grace – mortgage reporter at Personal Finance Insider

Here’s their advice about how to evaluate mortgage lenders, and how to decide which type of mortgage is best for you. (Some text may be lightly edited for clarity.)

What factors should someone take into consideration when choosing a mortgage lender?

Anthony Park, author:

“The canned answer is to just go with the lowest rate. However, you also want to take into account who’s going to serve your loan best. Are repayments going to be easy for you? Who is most likely to be able to help you if you need to take out a HELOC or refinance later, versus somebody who’s more of a one-off type?

“They may have the lowest rates to get you involved, but they might have very, very little hand holding after the fact. I wouldn’t recommend paying an exorbitant amount more for potential services in the future, but just don’t always necessarily go with the rock-bottom lowest rate. There’s sometimes a cost with that.”

Molly Grace, Personal Finance Insider:

“Remember that you’re not just choosing a mortgage lender — you’re also building a homebuying team. To snag the home you want in this competitive market, you need a lender that can move quickly and has good communication with you and your real estate agent.

When I was looking for a house, I was able to text my loan officer (whom my real estate agent recommended) and get quick replies when I had questions or needed an updated preapproval letter for an offer. As you compare lenders, pay attention to how responsive they are, and ask your agent if they have any experience with the lenders you’re considering.”

How can someone decide between a conventional mortgage vs. a government-backed mortgage?

Molly Grace, Personal Finance Insider

“An FHA mortgage is a really helpful option for borrowers with low scores or kind of rocky credit histories. But if you have great credit, you may get a better rate and pay less for mortgage insurance on a conventional mortgage.

VA mortgages are really great deals. If you qualify for one, you should definitely go for it. You get zero down with no mortgage insurance — plus some of the best rates available.”

Julie Aragon, Aragon Lending Team:

“The most common government loan that’s widely available to almost everyone is the FHA loan. There’s a couple of reasons why somebody would go with FHA instead of a conventional one. Their credit is a little on the crummy side, let’s say below 700. You can get conventional with down to a 620 score, but the mortgage insurance gets really expensive. FHA doesn’t discriminate — no matter how perfect or crappy your credit is, the mortgage insurance is the same.”

How can someone know whether they’re financially ready to buy a home?

Lauryn Williams, CFP:

“You should have funds left over after everything is said and done as it pertains to purchasing the home. So if you don’t have an emergency fund plus a down payment, you’re probably not ready to purchase a home. Another thing I think about is credit card debt. While you can be approved for a mortgage with credit card debt and student loans and very little cash on hand, you put yourself in a very risky situation.”

Molly Grace, Personal Finance Insider

“You have to be ready to dedicate a chunk of your budget to homeownership — and I don’t mean your mortgage payment. When you own your house, there’s always something that needs taking care of, especially in the first year. We got to our new house on moving day to find that the A/C was out. We paid $700 to have it fixed.”

Methodology: How We Chose the Best Low Credit Score Lenders for 2023

In choosing the best mortgage lenders for low credit scores, Personal Finance Insider looked for lenders that:

Offer mortgages that allow scores below 620, including FHA mortgages.
Have flexible credit requirements on one or more of their mortgage products — this could include accepting non-traditional forms of credit (such as proof of rent payments in lieu of a formal credit history) or considering borrowers who have negative events (such as a bankruptcy or foreclosure) on their credit reports.

FHA mortgages can be a great option for those with lower scores, but some lenders that offer these mortgages require higher scores than the minimum of 580 (or 500 with a 10% down payment). Some lenders, for example, require scores of 620 across the board, regardless of the specific loan type. All of the lenders on this list allow scores of 600 or lower on their FHA mortgages.

Many of the lenders we included also have their own specialty mortgage products that allow scores below 620, such as Carrington’s Flexible Advantage mortgage.

We also looked at the following:

Customer satisfaction. If the lender appeared in the J.D. Power 2022 Mortgage Origination Satisfaction Study, we looked at its ranking. If it wasn’t in the survey, then we read online customer reviews.
Ethics. Most of our top picks received an A+ from the Better Business Bureau, which measures companies’ trustworthiness. The exceptions are Guild Mortgage, which has an A rating, and Citibank, which has an F. We also researched and considered any scandals in the past three years.

Rocket Mortgage is the only lender on our list that does not have flexible credit requirements. But we still included it because it thrives in other areas, like customer satisfaction.

See our full methodology for evaluating mortgage lenders »

Mortgage Lenders for Low Credit Scores Frequently Asked Questions

Best Overall for Low Credit Scores

Carrington Mortgage Services

The bottom line: We recommend Carrington as our top choice for borrowers with low scores. It allows credit scores as low as 500 on some of its government-backed mortgages, and has options for borrowers with recent negative events on their credit reports.

Carrington’s standout feature is its Carrington Flexible Advantage mortgage, which accepts borrowers who have recent negative credit events, such as a foreclosure or bankruptcy, on their credit reports. The minimum credit score for this mortgage is 550.

Carrington’s FHA and VA mortgages allow credit scores as low as 500.

Carrington has a C- rating from the BBB.

Carrington Mortgage Services Review

Best for Those With No Credit History

Guild Mortgage

The bottom line: Guild Mortgage allows credit scores as low as 540 on its FHA and USDA mortgages. It also accepts non-traditional credit from borrowers who have no credit history through Guild’s Complete Rate program, which is available on its FHA, VA, and USDA mortgages.

Guild Mortgage is an affordable option for borrowers who have lower scores and those who don’t have one at all. If you don’t have an established traditional credit history, you can use things like your rent, utility, or car insurance payment history to prove your creditworthiness. Guild can also help connect you with down payment assistance programs in your county.

Guild mortgage has an A+ rating from the BBB. It ranked above average in customer satisfaction on J.D. Power’s 2022 study of mortgage originators.

Guild Mortgage Review

Best Low-Credit Score Mortgage for a Variety of Options

New American Funding

The bottom line: For borrowers with low credit scores, New American Funding is a good option that has flexible requirements on its government-backed mortgages.

New American Funding is another affordable option for borrowers thanks to its variety of mortgage options and flexible credit requirements.

The minimum credit score for its FHA, VA, and USDA loans is 580, though borrowers may be able to go lower with compensating factors. This lender also accepts non-traditional credit (such as proof of rent or utility payments) from those who have no score.

Additionally, its I CAN mortgage lets borrowers choose any term length between eight and 30 years. However, you’ll need at least a 620 credit score to qualify for this mortgage.

New American Funding has an A- rating from the BBB.

New American Funding Mortgage Review

Best Low-Credit Score Mortgage for an Easy Online Experience

Rocket Mortgage

The bottom line: Rocket Mortgage is a good option if you want a smooth online experience and prioritize customer support.

Rocket Mortgage ranked as the top lender for customer satisfaction from J.D. Power in 2022. Rocket Mortgage offers a quick and easy online experience, with live online chat.

This lender requires a minimum credit score of 580 for its FHA and VA mortgages.

Rocket Mortgage has an A+ rating from the BBB.

Rocket Mortgage Review

Best Low-Credit Score Mortgage for Low Down Payments

Citibank

The bottom line: Citibank’s HomeRun mortgage is an affordable option for borrowers looking for a mortgage that accepts non-traditional credit.

While many lenders offer mortgage options that allow 3% down payments, Citibank’s HomeRun mortgages allow 3% down with no mortgage insurance requirement, meaning you’ll save money each month on your mortgage payments. You can also use non-traditional credit to apply for one of these loans, though you’ll need to put at least 5% down if you plan to do so.

Citibank doesn’t list its minimum FHA score requirements online, but you may be able to get a mortgage with a score as low as 580 if your finances are otherwise in good shape, according to a loan officer who spoke with Insider.

Citibank has an F rating from the BBB due to unanswered and unresolved complaints. Though this lender is rated poorly by the BBB, it earned the No. 3 spot in customer satisfaction on J.D. Power’s 2022 study.

Citibank Mortgages Review

Best Low-Credit Score Mortgage for Self-Employed Borrowers

CashCall Mortgage

The bottom line: For self-employed homebuyers with lower scores, CashCall Mortgage has two options that provide the flexibility some of these types of borrowers need to obtain mortgage approval.

CashCall Mortgage’s loans for self-employed borrowers, independent contractors, and commission-based earners offer an alternative to providing tax returns and W-2s.

Its bank statement loans let borrowers use their bank statements to document their income, while its 1099 earner loans accept 1099 forms as documentation, with no tax returns required. Both of these mortgages allow credit scores as low as 600.

CashCall Mortgage is the trade name for Impac Mortgage Corp., which has an A+ rating from the Better Business Bureau.

CashCall Mortgage Review

Best Low-Credit Score Mortgage with No Minimum Credit Score

CrossCountry Mortgage

The bottom line: CrossCountry Mortgage doesn’t set a minimum credit score on any of its mortgages. Borrowers with lower scores may have an easier time finding a mortgage that works for them with this lender than they would elsewhere.

For borrowers looking for a more flexible mortgage lender, CrossCountry may be a good option. In addition to having no minimum credit score requirement on its mortgages, it also accepts non-traditional credit (such as rent payment history) from borrowers who have no score.

CrossCountry Mortgage has an A+ rating from the BBB, but it ranked below average in J.D. Power’s annual customer satisfaction study.

CrossCountry Mortgage Review

Other Mortgage Lenders We Considered

Guaranteed Rate: Those with no credit score may be able to get a mortgage with Guaranteed Rate using non-traditional credit. But it says you’ll need a “favorable credit score” to get an FHA mortgage.

Wells Fargo: Though this lender offers a few different affordable mortgage options, it earned a below-average customer satisfaction score from J.D. Power and has dealt with several controversies in recent years.

Mr. Cooper: Mr. Cooper ranked low in customer satisfaction in J.D. Power’s 2022 study.

Truist: You may be able to qualify using non-traditional credit with Truist. But it doesn’t have as many standout features as some of our other favorites.

Freedom Mortgage: Freedom Mortgage received a low ranking in customer satisfaction from J.D. Power.

LoanDepot: LoanDepot scored above the industry average in customer satisfaction in J.D. Power’s annual study, but it doesn’t have any flexible credit requirements.

Flagstar Bank: This bank has an A+ from the BBB, but doesn’t have flexible credit requirements.

Pennymac: PennyMac is another lender that ranked low in customer satisfaction in J.D. Power’s annual study.

Paramount Bank: This bank offers FHA loans, but doesn’t show interest rates on its site.

Regions: Regions offers FHA loans, but this bank only has branches in certain parts of the US.

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