The Best Mortgage Lenders for Low Credit Scores of November 2022

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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.

What constitutes a “good” or “bad” credit score when it comes to mortgages? The credit score you’ll need to buy a house varies depending on the type of mortgage you get, but you’ll generally have a harder time getting approved for a mortgage if your score is below 620.

If you have a lower score, you need to work with a lender that has mortgage programs that suit your needs. 

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.

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.

All of Carrington’s government-backed loan options, which include its FHA, USDA, and VA mortgages, allow credit scores as low as 500. 

Carrington has an A+ rating from the BBB.

Best for those with no credit history: Guild Mortgage

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 No. 1 in customer satisfaction on J.D. Power’s 2021 study of mortgage originators.

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.

Best for an easy online experience: Rocket Mortgage

Rocket Mortgage ranked as the top lender for customer satisfaction from J.D. Power for 11 consecutive years, and ranked No. 2 in 2021. 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.

Best for low down payments: Citibank

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 and government action against the business.

Though this lender is rated poorly by the BBB, it earned the No. 3 spot in customer satisfaction on J.D. Power’s 2021 study.

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.

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 2021 study.
• Truist: You may be able to qualify using non-traditional credit with Truist. But the lender ranked below the industry average in J.D. Power’s 2021 study.
• 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.

Methodology: How we chose the best low credit score lenders for 2022

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 2021 Primary Mortgage Origination Satisfaction Survey, we looked at its ranking. If it wasn’t in the survey, then we read online customer reviews.
• Ethics. Most 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.

Are these mortgage lenders trustworthy?

We have included each lender’s grade from the Better Business Bureau. The BBB evaluates businesses by looking at companies’ responses to customer complaints, transparency about business practices, and honesty in advertising.

Most of our top picks have an A+ from the BBB. The two exceptions are Guild Mortgage, which has a A- rating, and Citibank, which has an F rating.

The BBB says that Guild Mortgage received a A- rating due to government action against the lender. In 2020, Guild Mortgage paid the United States $24.9 million when it was accused of approving FHA mortgages for people who didn’t qualify, resulting in loan defaults. 

Citibank’s poor rating is due to unanswered and unresolved complaints and government action against the business, which involved Citibank’s failure to prevent the deletion of subpoenaed audio recordings due to a known issue with its audio preservation system. But the lender is strong in customer satisfaction and has good customer reviews on its Zillow profile.

In 2019, the US Justice Department required Rocket Mortgage’s parent company Quicken Loans to pay $32.5 million for alleged mortgage fraud. The Justice Department claimed Quicken Loans approved mortgage applications it shouldn’t have. Although Quicken Loans paid the settlement, the company never admitted to mortgage fraud.

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