Mortgage lenders have tightened their credit requirements since the freewheeling lending days that led to the financial crash. Borrowers need, in general for a conventional mortgage, a minimum FICO score of about 650. Remember, the higher your credit score, the lower you mortgage interest rate will be.

What To Do If Your Credit Score Is Too Low For A Mortgage
What To Do If Your Credit Score Is Too Low For A Mortgage

With a lower credit score, expect to put more down

With a lower score, the best thing that you can do to increase your chances of getting a mortgage is to increase your down payment. The more equity you have in the property, the less the risk is to your lender.

Consider mortgage alternatives

The U.S. Department of Veteran Affairs has a program that helps service men and women, veterans, and qualified surviving spouses become homeowners. The VA does not loan money but offers lenders a guarantee on your home loan equal to 25 percent of the approved loan up to the maximum allowed for the year. Although the VA does not set minimum FICO scores for mortgages, its partners have set a minimum of 620 as a credit score for a VA mortgage.

Another option is see if you can get a Federal Housing Authority (FHA) mortgage. Because these loans are backed by the government, lenders are more forthcoming to borrowers with less than stellar credit. Although higher scores are always preferable, FHA policy requires a minimum FICO score of 580 for a 3.5 percent down payment. With a credit score between 500 and 580 the down payment must be 10 percent.

The US Department of Agriculture has a home loan program for which you may qualify as well. The program is designed to assist rural residents with moderate incomes.

Raise your FICO score

If your credit score is too low for a convention mortgage, the best solution is to raise it. Step one is to get your credit reports from all three credit reporting agencies.  A credit report is not the same as a score but the reports will tell you how you are handling your debts. You can get your FICO score directly from while you’re entitled to get a free annual credit report from Experian, TransUnion and Equifax through Be sure to scrutinize the reports for inaccuracies. It doesn’t cost anything to dispute inaccurate information. Identity theft is becoming more common. If you see any accounts that you did not authorize, you’ll probably have to file a police report as the first step for having them removed.

Beyond that, you can improve your score, by paying your bills on time and getting the percent of credit utilized lower.

Both the Federal Trade Commission (FTC) and the Consumer Finance Protection Bureau (CFPB) warn consumers to be very leery of companies that claim they can raise your credit scores by removing accurate records of delinquencies. This behavior of these companies is governed by the Credit Repair Organizations Act (CROA) which made it illegal for credit repair companies to mislead you about what they can do and to charge you in advance for their services. Everything a credit clinic does for your has to be spelled out in advance with a time frame for results and the total cost you pay, while you’re given a three day right to rescind the contract without a charge.

A better path is to turn to  respected nonprofit organizations like HomeFree-USA and HOPE NOW for help in getting your credit score to the point where you’ll qualify for a mortgage on the home of your dreams.

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  • Bad Credit Lender

    FHA – VA Approved with Credit Scores as low as 580.
    • Direct Endorser of FHA and VA loans:
    FHA Loan: 3.5% down payment, plus 580 or greater credit score VA Loan : 0% down payment, plus 580 or greater credit score.
    • FHA Loan: 580-619 credit requires a debt to income ratio of 43% or less to avoid automatic downgrade to manual underwrite, 620+ FICO up to 55% DTI with an Automated Approval.
    • VA Loan: 100% financing up to a 46% DTI on a manual underwrite. [If compensating factors needed, see list below].
    • 3 Open Trade Lines with 12+ months recent activity & positive payment history.
    • Alternative trade lines accepted: utilities, car/renter’s insurance, cable, phone, etc….
    • Loan Processing and Underwriting all under one roof.
    • 15- 21 day Turn times from Contract date to Fund Date.
    • Same Day Credit Analysis and Conditional Loan Approvals—7 days a week.

    Compensating Factors [When Necessary on a Manual Underwrite].
    One or more of the following:
    • 1-3 months of reserves (PITI).
    • Job stability (2+ Years with Current Employer).
    • A potential of a substantial increase in earnings due to job training or education.
    • Current rent is comparable to or more than proposed mortgage payment (Minimal payment shock).

    Chris Mallon
    Loan Officer
    1300 West Walnut Hill Lane, Suite 257 Irving TX 75038.
    Irving Office Direct: 214-281-8623 Cell: 817-874-0465 Fax: 888-377-8031.
    Company NMLS # 32416-Branch NMLS #1219148.