How Can I Secure a Mortgage with a “Poor” Credit Score?


For better or for worse, your credit score will affect many different components of your life. Not only will your credit score affect whether or not you are able to qualify for a particular loan, but it will also affect the interest rate that you will be expected to pay.

This is especially true for a mortgage which is, in a sense, just a big loan that lenders issue with the explicit purpose of buying a home. If you have a great credit score, buying a home will be much easier. But if your credit is not so great, for whatever reason, securing a mortgage—and a mortgage with a good interest rate—will be quite a bit more difficult.

If there is anything you can do to improve your credit score—such as removing bad marks, paying off your existing debt, or changing your debt-to-income ratio—you should definitely try to do these things before you begin the application process. A better credit score can help you qualify for a larger mortgage and can potentially save you tens, even hundreds, of thousands of dollars over time.

However, quickly improving your credit score will not always be an option. When that is the case, you are going to want to come up with a plan when applying for a mortgage.


Will Mortgage Companies Check

My Credit Score?

Generally speaking, yes. Essentially all private lenders will check your credit score when you are applying for a mortgage. Issuing a mortgage is something they consider to be a major financial risk and they will want to do their due diligence before making a final decision.

However, your credit score is one of just many possible factors that a mortgage lender will consider. If you are able to make a larger down payment, accept a higher interest rate, or accept some other terms, qualifying for a mortgage can still be possible—even if you have bad credit.


What Credit Score Do I Need to Get a Mortgage?

Your credit score isn’t just considered “good” or “bad”—the credit score system exists upon a spectrum. This means that even if your credit score is good enough to get the mortgage, it still might not be good enough to get the interest rate you want. Recent FICO reports indicate that while someone with an excellent credit score (760 to 850) could qualify for a 2.8 percent interest rate, someone with a credit score around 620 could expect to pay around 4.4 percent.

That might not sound like much, but over the course of a 30-year $300,000 mortgage, this difference will result in a $100,000 difference in interest payments.

As a rule of thumb, the absolute minimum credit rate you need to qualify for a traditional, unsecured, private-sector mortgage is 620.  Although a 620 credit score qualifies you, you can still expect to pay much more in interest over time. Even if you have a credit score that is lower, there are still a few possible ways that you can obtain a mortgage and eventually become a homeowner.

How to Get a Mortgage with Not-So-Great Credit?

There is no “legal minimum” regarding the credit score you need to secure a mortgage—whether or not your mortgage application will be approved will be left to the discretion of the lender. If you are able to make the other components of your mortgage application more appealing, you will be much more likely to get approved.

So, keeping this in mind, what are the best ways to get a mortgage with a low credit score?

Find a Co-Signer:


If you can get someone with a better credit score to co-sign on the mortgage (meaning they will assume both the risks and rights of ownership), you can considerably increase your chances of getting a mortgage. Your spouse, family, friend, business partner, and just about anyone else can become a co-signer.

Look for Government-Backed Mortgages:


There are many federal programs designed to help people become homeowners, including those offered by the VA, FHA, USDA, and other federal departments. These loans usually have much more navigable terms, though you might be limited in the homes you can potentially purchase.

Explore Your Options:


People frequently assume that the only way to get a mortgage is through a traditional bank, but this is really just one of many options currently available. Looking and getting quotes from online lenders, credit unions, and other sources can help you find a more desirable mortgage.

Consider Down Payment Assistance:


Applying for down payment assistance will make your mortgage application more appealing, even if you have poor credit. Currently, there are more than 2,500 down payment assistance programs available in the United States.


Even if you have poor credit, a mortgage is something that is likely obtainable. As long as you are willing to explore your options, be flexible, and accept the possibilities of higher interest payments, the dream of homeownership is likely still within reach.


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