How to Get a Mortgage with Bad Credit: A Real Estate Guide for Buyers

Struggling with bad credit? Learn practical steps to qualify for a mortgage and buy a home with confidence—even with a low credit score.

henry66

Jul 3, 2025 - 16:00

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How to Get a Mortgage with Bad Credit: A Real Estate Guide for Buyers

Owning a home is a dream for many, but if you have bad credit, getting approved for a mortgage can feel impossible. The good news? It's not. Even with a low credit score, there are ways to secure financing and become a homeowner. This guide will walk you through practical steps to help you qualify for a mortgage with bad credit.

1. Understand Your Credit Score

Your credit score plays a major role in mortgage approval. Lenders use it to assess your risk. Heres how credit scores are generally categorized:

Excellent: 750+
Good: 700749
Fair: 650699
Poor: Below 650

If your score falls below 650, youre considered a high-risk borrower. But dont worrysome lenders still work with you.

2. Check Your Credit Report for Errors

Before applying, get a free copy of your credit report from agencies like Experian, Equifax, or TransUnion. Look for mistakes such as:

Incorrect late payments
Accounts that dont belong to you
Old debts that shouldve been removed

Disputing and correcting these errors can boost your score quickly.

3. Save for a Larger Down Payment

A higher down payment reduces the lenders risk, making them more likely to approve you. Aim for 10%20% if possible. It also lowers your monthly payments and may help you qualify for better terms.

4. Consider Government-Backed Loans

If you have bad credit, government-backed mortgage programs can be your best bet:

FHA Loans: Backed by the Federal Housing Administration, these allow credit scores as low as 580 with a 3.5% down payment.
VA Loans: For veterans, service members, and their families. They often have no credit score minimum and require no down payment.
USDA Loans: For rural and suburban buyers, with lenient credit requirements and no down payment.

5. Get Pre-Approved by Multiple Lenders

Every lender has different requirements. Some specialize in helping borrowers with bad credit. Getting quotes from multiple lenders helps you:

Compare interest rates
See whos willing to work with your credit history
Understand your loan options

This step also shows sellers youre a serious buyer.

6. Work with a Mortgage Broker

Mortgage brokers have access to a network of lenders and can help you find one that fits your credit situation. They often know which lenders are flexible and can match you with the right loan.

7. Add a Co-Signer or Co-Borrower

Having someone with better credit co-sign your mortgage can increase your chances of approval. Just remember, this person will be responsible for the loan if you miss payments.

8. Improve Your Credit Before Applying

If youre not in a rush, take time to improve your credit. Heres how:

Pay all bills on time
Reduce credit card balances
Avoid applying for new credit
Keep old accounts open to lengthen your credit history

Even a 2030 point increase can make a big difference.

Final Thoughts

Bad credit doesnt have to stop you from owning a home. With the right strategies and support, you can still get a mortgage and enter the real estate market confidently. Take control of your finances todayand move one step closer to homeownership.