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Getting A Mortgage Loan With Low Credit Scores

Can you get a mortgage loan with less-than-perfect credit? Yes, you can, and the good news is that you can always improve your credit scores. Credit scores are based on reports from lenders, public records, government agencies, landlords and others that are compiled by credit bureaus; scores are the shorthand lenders use to make lending decisions and set interest rates, terms and fees.  

A poor credit score is between 300-579, and any score under 670 is considered “subprime,” defined by as a mortgage loan with a higher interest rate to compensate for the lender’s risk. Subprime loans typically come with adjustable interest rates and higher costs. 

According to, there’s not a specific minimum credit score that lenders use to deny credit to borrowers with questionable credit. Lenders can set their own requirements, however, so even if you have poor scores, there’s still a chance you can get a mortgage loan. Lenders also look at how much debt you have, if you have debts in collections, how much income you have, the loan-to-value of the home you want, and how much cash you have for a down payment. 

As a potential homebuyer, you may feel reluctant or embarrassed to talk to a mortgage lender but sharing key information could provide the lender better guidance. Perhaps you got behind on bills because of a job loss or limited hours during the pandemic. You could have high student debt or medical bills. You could have thin credit because you’re just starting out and have never opened accounts. Whatever your reasons, here are some suggestions to help you: 

1. Look for a lender who is willing to take time with you. Be upfront that you want to understand the process better. If you don’t know a good lender, ask for referrals from people you know who have recently purchased a home.

2. Shop around for better terms and low credit loan programs. Be willing to provide basic information your lender needs – income, debts and obligations such as child support or student loans so you can compare their rates and fees with others. 

3. You may qualify for state or private sector down payment assistance programs and grants. Look for programs in your state at and visit sources including and Ask about FHA mortgages, VA, Fannie Mae HomeReady and Freddie Mac Home Possible loans. 

4. Tell the lender about the blemishes on your credit and ask what you can do to repair the damage. They will give you positive steps to take, such as not opening new credit cards, paying down debt, making payments on time, paying more than the minimum required, and being willing to make a larger down payment, which will improve your loan-to-value ratio. Be patient that some items may take time, but your lender may also be able to fast-track a rescore to get you approved if you pay off a derogatory, for example. 

5. Create a strict budget aimed at reducing debt and building savings. Lenders also look at your cash reserves, 401K and other saving habits, as well as where and how you spend your money.  

You aren’t just a number, but if you have a credit score lower than 500, you might find getting a mortgage challenging. Your time could be better spent focusing on improving your credit first.