Best Bad Credit Home Loans in 2026

Comparison: best bad credit home loans

Compare our picks for the best home loans for lower credit scores:

Our top picks for the best bad credit home loans

All of our picks offer a range of loan types, including conventional loans and government-backed loans, which come with more flexible credit requirements. With most lenders, you’ll generally need a minimum credit score of 580 for Federal Housing Administration (FHA) loans and a minimum score of 620 for conventional loans. U.S. Department of Veterans Affairs (VA) loans typically require a score of 580 or 620.

Note that our picks for the best bad credit home loans technically require a minimum credit score in the fair credit range, or a FICO score of 580 to 669. If you have a credit score in the bad range (300 to 579), you generally won’t qualify for a home loan with most lenders. However, you may still be able to find some options as some FHA loans accept credit scores in the 500 to 579 range, according to the U.S. Department of Housing and Urban Development (HUD), and VA loans don’t technically require a minimum credit score.

Our picks may be Authorized Partners that compensate us. This doesn’t affect our recommendations or evaluations, but it may impact the order in which companies appear.

Our picks for the best home loans for lower credit scores come from:

• Citi
• Wells Fargo
• Bank of America
• Rocket Mortgage

Buying a house with bad credit

Lenders consider borrowers with poor to fair credit to be a higher risk, so many lenders may not lend to people with credit scores below 580.

While bad credit isn’t necessarily an automatic denial, you may need to bring more to the table for a lender's approval. This might include a larger down payment, or you may need to pay a higher interest rate or fees.

Demonstrate income stability

If you have a low credit score, it may help to prove that your income is stable.

“One effective approach for someone with bad credit aiming to get lender approval is to demonstrate income stability,” said Taylor Kovar, founder and CEO of 11 Financial. “A stable and consistent income over time can paint a picture of financial reliability, which is music to a lender's ears. This demonstrates to the lender that regardless of past credit issues, you have a steady income source that could be used for repayment.”

Plan for a bigger down payment

If you have a score under 580, you should plan for a bigger down payment.

“The more you can pay upfront, the less the lender has to loan out, and the more likely they will give you a loan,” Kovar said. “This move can be a powerful bargaining chip when you have a low credit score.”

Use collateral

If your lender will accept collateral, this may help your case. You may be able to put up assets such as a retirement account, stocks, funds, exchange-traded funds or insurance policies.

“Bringing something of value to use as collateral can also increase your chances of loan approval,” Kovar said. “Collateral provides a safety net for lenders and gives them a way to recoup their money if you default on the loan.”

Lower your debt load

One aspect lenders look at for all potential buyers is a debt-to-income ratio. If you have a lot of debt alongside poor credit, you look like an irresponsible borrower. You’ll need to lower your debt as much as possible before applying for a loan.

Choose a government-backed loan

You’ll typically need at least fair credit to get a conventional loan, but government-backed loans typically have more flexible credit requirements. These loans are a lower risk for lenders because they’re backed by the government.

Traditionally, FHA loans require a 10% down payment for credit scores between 500 to 579 and a 3.5% down payment if you have a score of 580 or higher. However, most lenders require a minimum score of 580 for FHA loans. And while the VA doesn’t set a minimum credit score for home loans, lenders who provide VA loans typically ask for a minimum score of 580 or 620.

» MORE: What credit score is needed to buy a house?

Alternatives to home buying when you have bad credit

If you have poor credit, the path to traditional homeownership through a mortgage lender might not be right for you. Instead, consider these alternatives:

Renting while improving your credit

If you have a credit score in the bad range, you’ll typically need to rent and work on building your credit before you can apply for a home loan. You can improve your credit by paying your bills on time and reducing your credit utilization ratio, among other strategies.

Rent-to-own

In a rent-to-own arrangement, you rent a home for a certain period of time with the option to buy it before your lease expires. A portion of your rent goes toward the purchase price of the home. These agreements can be a good option for people with bad credit who want to become homeowners in the future.

Lease option

Similar to a rent-to-own option, a lease option allows you to rent a home with the option to buy it at the end of the lease. However, unlike rent-to-own options, your monthly rent won’t go toward the purchase price.

» MORE: How to buy a house with bad credit

FAQ

Bottom line

Getting a home loan when your credit is in the poor to fair range isn’t impossible. All buyers have unique situations, and some lenders will look at your overall financial picture rather than just your credit score. But if you can hold off on a home purchase until your credit score improves, you will increase your chances of loan approval and a lower rate.