Get a Mortgage With Bad Credit

If your bad credit is due to a major event, you must wait a specific amount of time before you can re-enter the homebuying process. In 2026, these typical wait times are:

• Chapter 7 Bankruptcy: 2 years for FHA/VA, 4 years for Conventional.

• Chapter 13 Bankruptcy: 1 year of on-time payments for FHA/VA, 2 years from discharge for Conventional.

• Foreclosure: 3 years for FHA/VA, 7 years for Conventional.

While deep repair takes time, you can often see a boost within 30 to 60 days by:

• Paying down credit card balances to below 30% utilization.

• Disputing errors on your credit report (nearly 25% of reports have errors).

• Requesting a “rapid rescore” through your lender once you’ve paid down debts.

• Clearing tax liens or outstanding judgments, which is particularly vital for self-employed home buyers.

When you apply for a mortgage, the lender performs a “hard inquiry,” which can temporarily dip your score by a few points. However, credit scoring models recognize “rate shopping.” If you apply with multiple mortgage lenders within a 14-to-45-day window, all of those inquiries are usually treated as a single event. This allows you to compare offers without causing a “death by a thousand cuts” to your credit score.

Absolutely. A larger down payment reduces the “Loan-to-Value” (LTV) ratio, meaning the lender has less money at stake if you default. For an FHA loan, increasing your down payment to 10% can drop the minimum credit score requirement from 580 down to 500. For real estate investors, putting 20% to 25% down can often overcome a lower credit score that would otherwise be a deal-breaker for a standard investment loan.

Yes. Adding a co-signer with strong credit and stable income can significantly improve your chances of approval. A co-signer becomes legally responsible for the loan, which reduces the lender’s risk. This is a common strategy for first-time homebuyers or self-employed home buyers who have high net worth but a “bruised” credit history due to a specific past event like a divorce or medical emergency.

A low credit score is expensive. Lenders charge higher interest rates to offset the risk of lending to someone with bad credit. For example, in February 2026, a borrower with a 760 score might get a 6.0% rate, while someone with a 620 score might be offered 7.2%.

On a $400,000 30-year mortgage, that 1.2% difference can cost an extra $300 per month—totaling over $100,000 in additional interest over the life of the loan. This “credit score tax” is one of the biggest motivators for improving your score before buying.

Lenders look at more than just the three-digit FICO score. During the homebuying process, they perform a “tri-merge” credit pull to examine your full history, focusing on:

• Payment History (35% of score): Have you missed payments in the last 12–24 months?

• Credit Utilization (30% of score): Are your credit cards maxed out? (Ideally, keep balances below 30% of your limit).

• Recent Inquiries: Have you applied for a lot of new credit recently?

• Public Records: Are there recent bankruptcies, foreclosures, or tax liens?

There are three primary government-backed pillars for low-credit borrowers in the homebuying process:

• FHA Loans: The most popular choice. You can qualify with a 580 score for a 3.5% down payment, or a 500 score if you can provide a 10% down payment.

• VA Loans: Available to veterans and active military. While the VA has no official minimum, most lenders look for at least a 580 to 620. These require 0% down.

• USDA Loans: For rural and suburban areas. These require 0% down and generally prefer a 640 score, though manual underwriting can sometimes allow for lower scores if you have strong “compensating factors.”

In the world of homeownership, “bad” credit generally refers to a FICO score below 620. Most lenders categorize scores into these tiers for 2026:

• 740+: Excellent (Best interest rates and lowest fees)

• 670–739: Good (Highly competitive)

• 580–669: Fair (The standard “Bad Credit” range where specialized programs begin)

• 500–579: Poor (Requires high down payments or specific government-backed options)

If your score falls below 500, securing a traditional mortgage is extremely difficult, though some private “Non-QM” lenders may still consider your application if you have significant assets or a large down payment.

Yes, it is entirely possible. While traditional conventional loans typically require a minimum score of 620, several government-backed programs are specifically designed for those in the homebuying process who have lower scores. In 2026, lenders are increasingly using “alternative data”—such as on-time rent, phone, and utility payments—to supplement traditional FICO scores, providing more opportunities for borrowers with “thin” or “poor” credit files to qualify for a home.