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    Mortgages With Low Credit Score Requirements

    bad credit

    Many bad credit borrowers think twice before applying for mortgages because they think they’ll be automatically rejected. However, this isn’t always the case, especially if you know which lenders are bad credit friendly.

    Are you planning to purchase a home but need to narrow down your lending options? Keep reading to learn about the seven lenders that specialize in bad credit mortgages.

    FHA Loans     

    The Federal Housing Administration is a government agency tasked with making homeownership accessible to Americans with low incomes and bad credit scores. One of its main functions is to provide guaranteed mortgages that encourage lenders to consider the bad credit applicants that they might otherwise reject.

    The FHA offers a variety of home loans and each one is suited to lenders in specific circumstances. If you have a FICO score of 580 or better, you may be able to bypass the 10% down payment requirement.

    Borrowers of working age can apply for a traditional mortgage through the FHA. However, people over the age of 62 may want to consider a reverse mortgage to free up extra cash during their retirement.

    If you’d like to make green energy improvements to your home and lower your utility bills you may want to apply for The Energy Efficient Mortgage program.

    VA Loans       

    If you have served with the US Armed Forces in the past then you may qualify for a VA loan, even if your credit is less than ideal. This type of mortgage typically has lower funding fees and closing fees.

    Eligibility depends on how long you served, when you served, whether you performed active duty during a war, and the circumstances surrounding your discharge. A credit score in the high 500s or 600s will boost your chances of approval.

    You may also qualify for a VA loan if your deceased spouse served in the US military. To verify whether you’re eligible or not, you’ll want to contact your local veteran’s association.

    USDA Loans  

    The US Department of Agriculture has its own mortgage program. If you live in the countryside or a small town then you might be eligible.

    These loans focus primarily on homes in rural areas but many small towns in some suburbs fall within its qualifying areas. Residential areas with populations under 20 000 are usually eligible.

    In addition to the geographic limitations on this loan type, you’ll also need to meet the income requirements for borrowers. If you earn 15% more than the median income for your state then you may not be eligible. It’s best to have a FICO score of 600 or higher before you apply.

    Non-Government Loans                 

    There are regular loans out there that cater to bad credit borrowers, but you’re likely to pay a higher than average APR if you have a low credit score. 

    LLPAs (Loan Level Price Adjustments) are a feature of these mortgages that you’ll need to be aware of. This essentially means that the better your FICO score and the bigger your down payment, the less you’ll be charged in upfront fees.

    Homebridge 

    This lender is known to be flexible when it comes to low credit scores. In fact, you may be able to get approved with a FICO of 550 or better. 

    One of the key benefits of Homebridge is the 3% down payment that’s required for their mortgages. This is significantly lower than the 10% or higher deposit requirements that you’ll have to meet with other lenders.

    Mortgages offered by this lender are known to start from $50,000 in value. The efficient online application system is ideal for borrowers who are concerned about their health and would rather not visit a bank or mortgage office. 

    Mr. Cooper   

    This lender offers a variety of mortgage products, including most of the types we covered earlier in this article. You can apply for a traditional loan or take advantage of the FHA and VA options that are available.

    Mr. Cooper offers borrowers, even those with bad credit, the option of applying for jumbo mortgages. With this type of borrowing, you may be able to finance a more expensive real estate purchase. 

    Citibank         

    Citibank is one of the world’s biggest financial institutions. Therefore, it has decades of expertise and dedicated loan specialists on hand to assist mortgage customers.

    Bad credit customers are welcome to apply through this lender. Although, you may pay a higher APR than an applicant with a high FICO score would. If you already bank with Citibank, then you may benefit from discounts on your mortgage closing costs and interest rate. 

    Conclusion    

    Having bad credit doesn’t mean you can’t enjoy the benefits of homeownership. With so many lending options out there your chances of finding a mortgage provider are higher than ever.

    Just remember to approach your search with patience and persistence.