by Nahlah Abdur-Rahman
July 1, 2025
These lenders can handle bad credit to help applicants reach their homeownership dreams.
For those who are concerned that their credit history will prevent them from entering homeownership, some mortgage lenders exist that consider applicants with less-than-stellar credit scores.
According to CNBC Select, a conventional mortgage lender typically requires a 620 FICO score to approve a potential homeowner. However, if that score does not match your reality, that does not mean that buying a home is out of reach.
From private to government-backed loans, some lenders offer flexible credit requirements. The finance news outlet listed these lenders that offered features best suited to those with a lackluster credit history.
For FHA loans, Rocket Mortgage offers low interest rates to borrowers with a credit score of at least 620. However, if your score is lower than that, those with a credit score of at least 500 can still get an FHA loan with a 10% down payment.
While one of the largest home lenders in the U.S., they also hold high scores for customer satisfaction from J.D. Power. Closed deals can also receive a rebate of up to $10,000 for purchasing through Rocket Homes. However, this flexibility comes with some drawbacks, including a hard credit check and higher origination fees, as well as the absence of USDA loans or HELOCs.
Financing a home through Guild Mortgage can get those without a traditional credit history approved. Guild builds a credit history for borrowers by considering their on-time rent, insurance, and utility bill payments. They also consider those with low credit, offering FHA, VA, and USDA loans for credit holders with a score of 540 or higher.
For non-qualifying mortgages, Carrington Mortgage Services accepts credit scores as low as 540. They offer a non-QM Flexible Advantage loan, which is particularly helpful for self-employed borrowers or those with a previous history of bankruptcy. However, they do not provide HELOCs or home equity loans if the property is mortgaged through this provider.
According to the National Association of Realtors® 2025 Snapshot of Race and Home Buying in America, Black homeownership still trails behind white homeowners by nearly 30 percentage points. While Black homeowners achieved the highest gains, affordability challenges persist. The demographic also suffers from higher housing cost burdens in the vast majority of states, with 21% of Black mortgage applicants also facing denials from lenders.
According to Investopedia, the majority of Black communities also have a median credit score of 582, leading to such barriers to achieving homeownership. Given these statistics, amplifying lenders that consider those with lower credit can help break the racial gaps in homeownership.
Other featured lenders include USAA, which is designed for veterans and those currently serving in the military. Although exclusive to this demographic, USAA still offers 0% down payment for most loans, even with non-traditional credit sources. Those who desire quick closing times can also apply through CrossCountry Mortgage, with down payment assistance available for first-time buyers.
If one dreams of having a home one day, these lenders may be the best course of action.
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