Best Bad Credit Mortgages for 2019

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Mr. Cooper

Mr. Cooper

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Editor's Take

With Mr. Cooper, you can get pre-qualified in minutes through a quick phone call. From there, the application process happens primarily online, with real-time updates posted directly to your account. Mr. Cooper also utilizes manual underwriting to find ways to qualify applicants with no credit history.

Mr. Cooper is a reputable mortgage lender, helping over 30 million homeowners as the third largest mortgage servicer in the nation. Plus, their new app lets you run countless financing scenarios, monitor your FICO score, and access property information.

Loan Features

  • Minimum Credit Score
    580
  • Minimum Down Payment
    3%
  • Refinancing
    Yes

Details

  • Conventional, FHA, VA, and jumbo loans available
  • Choose fixed or adjustable rate
  • Home equity loans available

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Vylla

Vylla

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Editor's Take

Vylla is unique in a couple of different ways. To start, you can not only apply for a mortgage, but also search for your new home within the site. You can even sort results by monthly payments to see what you can truly afford. Vylla also offers flexible home loans for borrowers who don’t qualify for traditional financing.

Loan Features

  • Minimum Credit Score
    500
  • Minimum Down Payment
    3%
  • Refinancing
    Yes

Details

  • Conventional, FHA, USDA, and VA loans available
  • Shop for homes by monthly payment or purchase price
  • Special loans for bad credit

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Homebridge Financial Services

Editor's Take

Homebridge loans are available in all 50 states, making it a great choice no matter where you live. You can find traditional, government-backed, and renovation loans to meet your needs – and your level of credit.

Loan Features

  • Minimum Credit Score
    550
  • Minimum Down Payment
    3%
  • Refinancing
    Yes

Details

  • Conventional, FHA, VA, and USDA loans
  • Renovation loans available
  • Available nationwide

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How to Strengthen Your Mortgage Application

Even with bad credit, there are a few steps you can take to make your application stronger in the eyes of a lender. Follow these three tips to get started.

Get a Co-signer

Some lenders allow you to apply with a co-signer on your mortgage. This could be a parent, spouse, or other close relative or friend. The lender still uses the middle credit score of the borrower with the lowest credit, but you can use their income to help you qualify for the loan. The risk is that the co-signer is equally responsible for your mortgage and you’ll need to refinance in order to drop them off the loan in the future.

Lower Your Debt

Paying off debt in advance of applying for a mortgage helps to improve your credit score, especially if you’re tackling revolving debt through credit cards. Your “amounts owed” is one of the most impactful components of your score, so lowering your debt can quickly boost your credit. A smaller amount of debt also improves your debt-to-income ratio, which affects how much of a home loan you qualify for.

Pay More Money Down

A larger down payment strengthens your mortgage application regardless of your credit score. Because you are more financially vested in the home, the lender views you as more motivated to keep up with your payments each month. After all, if you were to go into foreclosure, you would lose all that equity you put into the home. You may even qualify for a better interest rate with a bigger down payment, which can offset the cost of a bad credit mortgage.

Frequently Asked Questions

What’s the lowest credit score to get approved for a mortgage?

Each lender technically has their own lending standards, but a 580 is usually the minimum if you want to qualify for a lower down payment amount. You could get approved for an FHA loan with a 500 score, but you’d need to make a 10% down payment.

How do you get pre-qualified for a mortgage?

You can get pre-qualified by giving a lender an estimate of your finances, either verbally or online. Once you start to submit documentation and undergo a credit check, you can get pre-approved, which is a more formal step of the mortgage approval process. You’ll also get an idea of what type of loans and rates you qualify for.

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