Bad Credit Mortgage 2025: Get Approved with 580 Score (Real Stories + Strategies)
"I have a 590 credit score. Can I still get a mortgage?" YES. Absolutely. FHA loans accept scores as low as 580, and some subprime lenders go even lower (500-550 range). Here are 7 real people who got approved with bad credit, exactly how they did it, which lenders said YES, and the complete roadmap to getting YOUR approval—even with past bankruptcies, collections, or foreclosures. Find lenders who specialize in bad credit approvals and get pre-approved today.
✅ YES, You Can Get a Mortgage with Bad Credit
580
Minimum credit score for FHA loan (3.5% down)
500-550
Some subprime lenders accept scores this low (10%+ down)
2-4 years
After bankruptcy/foreclosure, you can qualify again
43%
Of Americans have credit scores below 700 (you're not alone)
What Credit Score Do You REALLY Need for a Mortgage in 2025?
The truth: You don't need a 750 credit score to buy a house. Different loan types have different minimums, and some lenders are MORE flexible than others.
FHA Loans: The Bad Credit Champion
FHA Loan Requirements:
- • 580+ credit score: 3.5% down payment
- • 500-579 credit score: 10% down payment required
- • Debt-to-income ratio: Up to 50% allowed (vs 43% for conventional)
- • After bankruptcy: 2 years wait (vs 4 years conventional)
- • After foreclosure: 3 years wait (vs 7 years conventional)
- • Collections/charge-offs: Allowed (don't need to pay off first)
"I got approved with a 592 credit score and $15,000 down on a $200K house. FHA saved me." - Maria, 34. Get pre-approved for an FHA loan even with bad credit.
Conventional Loans: Need Better Credit
Conventional Loan Requirements:
- • 620+ credit score: Minimum (most lenders want 640+)
- • 3% down payment: Available for first-time buyers. Calculate your affordability with different credit scores.
- • 5-20% down: Standard for repeat buyers
- • Debt-to-income ratio: 43% max (some allow 50%)
- • After bankruptcy: 4 years wait
- • After foreclosure: 7 years wait
"I was rejected for conventional with 615 score. Switched to FHA and got approved immediately." - James, 29
VA Loans: Flexible for Veterans
VA Loan Requirements (Veterans Only):
- • No minimum credit score: Officially (most lenders want 580+)
- • 0% down payment: No down payment required
- • No PMI: Save $100-200/month vs FHA
- • Debt-to-income ratio: Up to 60% allowed (very flexible)
- • After bankruptcy: 2 years wait
"VA loan approved me with 570 score and zero down. Best benefit ever." - David, veteran, 41
Subprime Lenders: Last Resort (500-550 Scores)
Subprime/Non-QM Loan Options:
- • 500-550 credit scores: Some lenders accept (rare)
- • 10-20% down payment: Required for low scores
- • Higher interest rates: 8-12% vs 7% for good credit
- • Larger down payment = better rate: 20% down can get you 8% vs 12%
- • Manual underwriting: They look at full picture, not just score
"I had 540 score after bankruptcy. Subprime lender approved me with 15% down at 9.5% rate. Not ideal but I'm a homeowner." - Robert, 38
Connect with lenders who specialize in bad credit mortgages
Real Story #1: Maria Got Approved with 592 Credit Score (FHA Loan)
Maria Rodriguez, 34
Medical assistant | Phoenix, Arizona
Credit score: 592 | FHA loan approved for $200,000
Maria's Credit Situation:
- • Credit score: 592 (due to medical collections and late payments)
- • Income: $48,000/year as medical assistant
- • Debt: $8,000 in medical collections, $12,000 car loan
- • Savings: $15,000 for down payment
- • Rejected by 2 conventional lenders ("credit too low")
"I thought I'd never own a home with my credit. Two banks rejected me. Then I found an FHA lender who said: '592 is fine, we can work with that.' I cried when I got approved. I'm a homeowner now."
How Maria Got Approved:
Step 1: Found FHA-Specialized Lender
- • Stopped applying to conventional lenders (wasting time)
- • Found lender who specializes in FHA loans for bad credit
- • Lender said: "592 is above our 580 minimum, you're good"
Step 2: Gathered Documentation
- • 2 years of tax returns
- • 2 months of pay stubs
- • 2 months of bank statements (showing $15K saved)
- • Letter explaining medical collections (hospital bills from surgery)
Step 3: Didn't Pay Off Collections
- • FHA doesn't require paying off collections first
- • Kept her $15K for down payment instead
- • Lender said: "We'll factor collections into debt ratio, but you're still approved"
Step 4: Got Approved!
- • Approved for $200,000 FHA loan
- • 3.5% down payment: $7,000
- • Interest rate: 7.25% (slightly higher due to credit)
- • Monthly payment: $1,580 (including PMI)
- • Closed in 35 days
The Numbers:
Loan Details:
- • Purchase price: $200,000
- • Down payment: $7,000 (3.5%)
- • Loan amount: $193,000
- • Interest rate: 7.25%
- • Monthly payment: $1,580
Why She Got Approved:
- • Score above 580 minimum
- • Stable job (3 years same employer)
- • Debt-to-income: 38% (under 50% max)
- • Explanation letter for collections
- • FHA-specialized lender
💡 Key Lessons from Maria:
- 1. Don't waste time with conventional lenders: "If your score is under 620, go straight to FHA lenders."
- 2. You don't need to pay off collections first: "I thought I had to. FHA said no, keep your money for down payment."
- 3. Explanation letters help: "I explained the medical bills were from emergency surgery. Lender understood."
- 4. Find specialized lenders: "Generic banks rejected me. FHA specialist approved me same day."
"I had a 592 credit score and $8,000 in medical collections. Two banks rejected me. Then an FHA lender said 'we can work with that' and approved me for $200K. I'm a homeowner now with bad credit. It's possible."
Maria R., Medical Assistant, Phoenix
Saved $200,000 home purchased
Get the same results as Maria:
Join 500K+ happy homeowners
Real Story #2: Robert Got Approved with 540 Score After Bankruptcy
Robert Williams, 38
Electrician | Dallas, Texas
Credit score: 540 | Subprime loan approved for $180,000
Robert's Situation:
- • Credit score: 540 (bankruptcy 3 years ago)
- • Income: $72,000/year as electrician
- • Bankruptcy: Chapter 7 filed in 2022 (discharged)
- • Savings: $30,000 for down payment
- • Rejected by FHA lenders ("need 580 minimum")
"After bankruptcy, I thought homeownership was 7+ years away. But a subprime lender said: 'We can work with 540 if you put 15% down.' The rate isn't great (9.5%), but I own a home 3 years after bankruptcy. That's incredible."
How Robert Got Approved:
Step 1: Found Subprime Lender
- • FHA lenders rejected him (540 below 580 minimum)
- • Found "non-QM" lender specializing in post-bankruptcy loans
- • Lender: "We accept 500+ scores with 15-20% down"
Step 2: Large Down Payment Strategy
- • Saved $30K specifically for this
- • Put 15% down ($27,000 on $180K house)
- • Larger down payment = lower risk = approval despite low score
Step 3: Manual Underwriting
- • Lender looked at full picture, not just credit score
- • Stable job: 8 years as electrician
- • Good income: $72K/year
- • Perfect payment history SINCE bankruptcy (3 years clean)
Step 4: Accepted Higher Rate
- • Interest rate: 9.5% (vs 7% for good credit)
- • Monthly payment: $1,430
- • Plan: Refinance in 2 years when credit hits 620+
- • "Worth it to own now vs waiting 4 more years"
💡 Key Lessons from Robert:
- 1. Subprime lenders exist for scores below 580: "Most people don't know these lenders exist. They do."
- 2. Large down payment opens doors: "15-20% down can get you approved despite terrible credit."
- 3. Plan to refinance later: "I'm paying 9.5% now but will refi at 7% in 2 years when my score improves."
- 4. Homeownership beats waiting: "I'm building equity NOW instead of waiting 4 more years."
Connect with lenders who accept 500-550 credit scores
5 More Real Bad Credit Approval Stories
Story #3: David, 41 - Veteran with 570 Score (VA Loan)
Army veteran | San Antonio, Texas | VA loan $220,000
"VA loan approved me with 570 credit score and ZERO down payment. Best military benefit ever. My credit was destroyed by divorce, but VA gave me a second chance."
💡 VA loans are incredibly flexible for veterans with bad credit.
Story #4: Jessica, 32 - Raised Score 560→640 in 8 Months
Teacher | Denver | FHA loan $275,000
"I had 560 credit score. Spent 8 months doing credit repair: paid down cards, disputed errors, got added as authorized user. Hit 640 and got approved for FHA with better rate."
💡 8 months of credit repair can save you thousands in interest.
Story #5: Michael, 28 - Used Parent as Co-Signer (595 Score)
Software developer | Austin | Conventional loan $310,000
"My 595 score wasn't enough for conventional. My dad co-signed with his 780 score. Got approved at 6.75% instead of 8%+. Saved me $400/month."
💡 Co-signer with good credit can get you better rates.
Story #6: Lisa, 36 - Manual Underwriting Saved Her (585 Score)
Nurse | Portland | FHA loan $245,000
"Automated system rejected me. Lender did manual underwriting, saw my perfect rent payment history (5 years), stable job, and approved me despite 585 score."
💡 Manual underwriting looks beyond credit scores.
Story #7: Tom, 44 - Bought Again 3 Years After Foreclosure
Sales manager | Atlanta | FHA loan $195,000
"Lost my house to foreclosure in 2022. Thought I was done. But FHA only requires 3-year wait. Got approved in 2025 with 605 score. Second chance at homeownership."
💡 FHA allows homeownership 3 years after foreclosure.
"I lost my home to foreclosure in 2022. Thought homeownership was over for me. But FHA only requires a 3-year wait. Got approved in 2025 with 605 credit score. Everyone deserves a second chance."
Tom H., Sales Manager, Atlanta
Saved $195,000 home purchased
Get the same results as Tom:
Join 500K+ happy homeowners
How to Improve Your Credit Score FAST (Before Applying)
Should you wait to improve your credit or apply now? It depends. If you're at 560, spending 6-8 months to hit 620+ can save you thousands in interest. Here's how to do it fast.
Strategy #1: Pay Down Credit Cards (Biggest Impact)
Credit utilization is 30% of your score. Paying down cards can boost your score 50-100 points in 30 days.
The Formula:
- • Under 10% utilization = excellent (e.g., $500 balance on $5,000 limit)
- • 10-30% = good
- • Over 30% = hurts your score
- • Over 50% = major damage
- • Maxed out = score killer
"I paid my cards from 80% utilization to 15%. My score jumped from 580 to 635 in 45 days." - Jessica, teacher
Strategy #2: Dispute Credit Report Errors
79% of credit reports have errors. Disputing and removing them can boost your score 20-50 points.
How to Dispute:
- • Get free reports from AnnualCreditReport.com
- • Look for: accounts you don't recognize, wrong balances, duplicate accounts
- • Dispute online with each bureau (Experian, Equifax, TransUnion)
- • Bureaus have 30 days to investigate
- • If they can't verify, they must remove it
Strategy #3: Become Authorized User on Good Account
Instant credit boost. Get added to parent/spouse's old card with perfect history. Can add 30-60 points immediately.
Requirements:
- • Card must be old (5+ years = best)
- • Must have perfect payment history
- • Low utilization (under 10%)
- • You don't need the physical card
- • Their history appears on YOUR report
Strategy #4: Pay Collections Strategically
Paying collections doesn't always help your score. In fact, it can HURT if done wrong. Here's the right way.
The Right Way:
- • DON'T just pay it: Paying resets the "date of last activity" and can LOWER your score
- • DO negotiate "pay for delete": Offer to pay if they remove it from your report
- • Get it in writing first: Before paying, get written agreement they'll delete
- • For FHA loans: You don't need to pay collections at all (they allow them)
Strategy #5: Get a Secured Credit Card
Build positive history fast. Secured cards report to bureaus just like regular cards. Can boost score 40-80 points in 6 months.
How It Works:
- • Deposit $200-500 (your credit limit)
- • Use it for small purchases ($20-50/month)
- • Pay in FULL every month (never carry balance)
- • After 6-12 months, upgrade to unsecured card
- • Get your deposit back
Check for errors and see where you stand before applying
Which Lenders Accept Bad Credit? (Where to Apply)
FHA Lenders (580+ Score)
Best for: 580-620 credit scores
Top FHA-Friendly Lenders:
- • Quicken Loans/Rocket Mortgage: Accepts 580+, easy online process
- • New American Funding: Specializes in FHA, accepts 580+
- • Carrington Mortgage: Very flexible with bad credit
- • FHA.com lenders: Network of FHA specialists
- • Local credit unions: Often more flexible than big banks
Subprime/Non-QM Lenders (500-579 Score)
Best for: Under 580 credit scores, recent bankruptcy/foreclosure
Subprime Lender Options:
- • Angel Oak Mortgage: Accepts 500+ with 10% down
- • Carrington Mortgage: Non-QM division accepts 550+
- • Deephaven Mortgage: Specializes in non-QM, accepts 500+
- • Athas Capital: Post-bankruptcy specialist
- • Note: Expect 8-12% rates, 10-20% down required
VA Lenders (Veterans with Bad Credit)
Best for: Veterans/active military with 580+ scores
VA-Friendly Lenders:
- • Veterans United: #1 VA lender, accepts 580+
- • USAA: Very flexible for members
- • Navy Federal Credit Union: Accepts 580+, great rates
- • Quicken Loans: Large VA division
Frequently Asked Questions
What is the lowest credit score to buy a house?
FHA loans accept 580 minimum (3.5% down) or 500-579 (10% down). Some subprime lenders accept scores as low as 500 with 15-20% down payment. VA loans have no official minimum but most lenders want 580+. Conventional loans require 620 minimum.
Can I get a mortgage with 580 credit score?
Yes, absolutely. FHA loans are designed for 580+ scores. You'll need 3.5% down payment, stable income, and debt-to-income ratio under 50%. Expect interest rates 0.5-1% higher than someone with 740+ score, but you CAN get approved.
Do I need to pay off collections before getting a mortgage?
Not for FHA loans. FHA allows collections and charge-offs on your credit report—you don't need to pay them off first. They'll count toward your debt-to-income ratio, but won't disqualify you. Conventional loans may require paying off collections over $2,000.
How long after bankruptcy can I get a mortgage?
Depends on loan type:
- FHA loans: 2 years after Chapter 7, 1 year after Chapter 13 (with payments)
- VA loans: 2 years after discharge
- Conventional loans: 4 years after Chapter 7, 2 years after Chapter 13
- Subprime lenders: Some accept 1 year after discharge
What interest rate will I get with bad credit?
Depends on your score:
- 740+ score: 6.5-7% (best rates)
- 680-739: 7-7.5%
- 620-679: 7.5-8%
- 580-619: 8-9%
- 500-579: 9-12% (subprime)
Higher rates mean higher payments, but you can refinance later when your credit improves.
Should I wait to improve my credit or buy now?
It depends on your situation. If you're at 560 and can hit 620 in 6-8 months, waiting can save you $200-400/month in interest. But if you're at 590 and stable, buying now with FHA might make sense—you're paying rent anyway, and you can refinance later when your score improves.
Can a co-signer help me get approved with bad credit?
Yes, a co-signer with good credit can help significantly. The lender will consider both credit scores and incomes. If your parent/spouse has 750+ credit, you might qualify for conventional loan instead of FHA, and get a much better interest rate (potentially saving $300-500/month).
Connect with lenders who specialize in bad credit approvals