Can You Get a Mortgage with Bad Credit in 2026? YES! Complete Guide (500-620 Score)
✅ YES! You CAN Get a Mortgage with Bad Credit
According to HUD data (January 2026), 23% of approved mortgages go to borrowers with credit scores below 620. You have options!
Minimum Scores: FHA 580 (3.5% down) or 500 (10% down), VA 580, USDA 640, Subprime 500. BUT—improving your score from 580 to 700 saves you $68,280 in interest over 30 years. This guide shows you BOTH paths: get approved NOW + improve credit to save BIG.
⚡ Quick Answer: Minimum Credit Scores by Loan Type
YES, you can get approved for a mortgage with bad credit! Here are your options based on credit score:
| Loan Type | Min Credit Score | Min Down Payment | Interest Rate (2026) | Best For |
|---|---|---|---|---|
| FHA | 580 | 3.5% | 6.75-7.25% | Most popular bad credit option |
| FHA (Higher Down) | 500 | 10% | 7.00-7.50% | Very bad credit with cash |
| VA | 580 | 0% | 6.50-7.00% | Veterans/military only |
| USDA | 640 | 0% | 6.50-7.00% | Rural areas only |
| Conventional | 620 | 3-5% | 6.50-7.50% | Minimum for conventional |
| Subprime/Non-QM | 500 | 10-20% | 8.00-12.00% | Last resort (very expensive) |
💡 Key Insight
FHA loans are your best bet with bad credit. 580 minimum score, 3.5% down, and rates only 0.5-1% higher than conventional. Compare FHA lenders here.
VA loans are even better if you're a veteran—580 score, 0% down, and lower rates than FHA!
✅ Bad Credit? Get Pre-Approved Anyway!
Don't let bad credit stop you. FHA lenders accept 580+ scores. Get pre-approved in 24 hours and see your options.
Get Pre-Approved with Bad Credit →✓ 580+ score accepted ✓ FHA specialists ✓ Free consultation
📊 What Is "Bad Credit" for Mortgages?
Credit scores range from 300-850. Here's how lenders categorize your score for mortgage purposes:
| Credit Score Range | Rating | Mortgage Options | Interest Rate Impact |
|---|---|---|---|
| 740+ | Excellent | All loans, best rates | 6.00-6.25% (lowest) |
| 700-739 | Good | All loans, good rates | 6.25-6.50% |
| 660-699 | Fair | Most loans, higher rates | 6.50-6.75% |
| 620-659 | Poor | FHA, VA, limited conventional | 6.75-7.25% |
| 580-619 | Bad | FHA, VA only | 7.00-7.50% |
| 500-579 | Very Bad | FHA (10% down), subprime | 7.50-12.00% |
| Below 500 | Extremely Bad | Subprime only (very limited) | 10.00-15.00% |
⚠️ What Causes Bad Credit?
- • Late payments: 30+ days late = 60-110 point drop
- • Collections/charge-offs: 50-100 point drop
- • Bankruptcy: 130-200 point drop (stays 7-10 years)
- • Foreclosure: 85-160 point drop (stays 7 years)
- • High credit utilization: Over 30% = 10-50 point drop
- • Too many inquiries: 5+ in 6 months = 10-30 point drop
💰 The $68,280 Cost of Bad Credit
Bad credit doesn't just make it harder to get approved—it costs you tens of thousands of dollars in extra interest. Here's the real math:
Real Example: $400,000 Loan, 30 Years
| Credit Score | Interest Rate | Monthly Payment | Total Interest | Extra Cost |
|---|---|---|---|---|
| 740+ | 6.00% | $2,398 | $463,352 | Baseline |
| 700 | 6.25% | $2,462 | $486,320 | +$22,968 |
| 660 | 6.50% | $2,528 | $509,680 | +$46,328 |
| 620 | 7.00% | $2,661 | $557,960 | +$94,608 |
| 580 | 7.25% | $2,729 | $582,440 | +$119,088 |
💔 The Brutal Truth
A 580 credit score costs you $119,088 more than a 740 score over 30 years. That's $331/month extra—enough for a car payment!
Good news: Improving your score from 580 to 700 saves you $68,280. Worth the effort? Absolutely. We'll show you how below.
🎯 Credit Score Tiers & What They Mean for Your Mortgage
Understanding your credit tier helps you know EXACTLY what to expect. Here's the complete breakdown with real lender data:
580-619: Bad Credit Tier
What You Can Expect:
- • Loan options: FHA, VA only (no conventional)
- • Interest rate: 7.00-7.50% (1-1.5% higher)
- • Down payment: 3.5% minimum (FHA), 0% (VA)
- • Approval odds: 60-70% if income/DTI good
- • Extra cost: $68K-$119K over 30 years
How to Improve:
- ✓ Pay down cards below 30% (+30-50 points)
- ✓ Dispute credit report errors (+10-30 points)
- ✓ Become authorized user (+20-40 points)
- ✓ Goal: Get to 620+ in 90 days for conventional access
- ✓ Get pre-approved now while improving
620-659: Poor Credit Tier
What You Can Expect:
- • Loan options: FHA, VA, limited conventional
- • Interest rate: 6.75-7.25% (0.75-1.25% higher)
- • Down payment: 3.5% FHA, 5-10% conventional
- • Approval odds: 70-80% with good income
- • Extra cost: $46K-$95K over 30 years
How to Improve:
- ✓ Focus on payment history (no 30+ day lates)
- ✓ Reduce utilization below 10% (+40-60 points)
- ✓ Goal: Get to 660+ in 6 months for better rates
- ✓ Refinance when score improves (save $50K+)
- ✓ Compare lenders for best rates at your tier
🚀 90-Day Credit Improvement Plan (+60-120 Points)
Want to improve your score FAST? Here's the exact 90-day action plan that can boost your score by 60-120 points:
Month 1 (Days 1-30): Quick Wins (+30-50 Points)
Week 1: Get Your Credit Reports
- • Day 1: Get free reports from AnnualCreditReport.com (all 3 bureaus)
- • Days 2-3: Review for errors (wrong accounts, incorrect balances, duplicate entries)
- • Days 4-7: Dispute ALL errors online (takes 5 min per bureau)
- • Expected gain: +10-30 points if errors found (30% of reports have errors)
Week 2: Pay Down Credit Cards (BIGGEST IMPACT)
- • Calculate utilization: Total balances ÷ total limits (aim for under 30%)
- • Strategy: Pay down highest utilization cards first
- • Example: $5K balance on $10K limit = 50% → pay to $3K = 30% (+30 points)
- • Pro tip: Pay BEFORE statement date (lowers reported balance)
- • Expected gain: +30-50 points (utilization = 30% of score)
Weeks 3-4: Become Authorized User
- • Ask family member with excellent credit (740+) to add you as authorized user
- • Requirements: Their card must have: (1) Low utilization, (2) Long history (5+ years), (3) Perfect payment history
- • How it works: Their good history gets added to YOUR report (instant boost)
- • Expected gain: +20-40 points (if their account is strong)
Month 2 (Days 31-60): Build Momentum (+20-40 Points)
- • Pay all bills on time: Set up autopay (prevents 60-110 point drops from late payments)
- • Keep utilization under 10%: Pay cards multiple times per month (extra +10-20 points)
- • Don't apply for new credit: Each inquiry = -5 points (avoid for 90 days)
- • Dispute follow-up: Check if errors removed (30 days after dispute)
- • Request credit limit increases: Call issuers, ask for CLI (lowers utilization without paying down)
Month 3 (Days 61-90): Final Push (+10-30 Points)
- • Check progress: Get updated scores (CreditKarma, lender pre-approval)
- • Pay down to 0% utilization: If possible, pay off all cards (extra +10-20 points)
- • Remove collections: Negotiate "pay for delete" with collectors (can remove negative marks)
- • Get pre-approved: See your new rate (likely 0.5-1% lower = $41K savings)
✅ Expected Results After 90 Days
- • Starting score 580: Improve to 640-700 (+60-120 points)
- • New rate: 6.50-6.75% vs 7.25% (save $68K over 30 years)
- • New loan options: Qualify for conventional (better terms than FHA)
- • Approval odds: 80-90% vs 60-70%
- • Total effort: 10-15 hours over 90 days = $68K saved ($4,533/hour!)
🏆 Best Lenders for Bad Credit 2026 (Ranked by Approval Rate)
Not all lenders accept bad credit. Here are the best lenders for 580-620 scores:
| Lender Type | Min Score | Approval Rate | Best For | Pros |
|---|---|---|---|---|
| FHA Specialists (NewDay, Carrington) | 580 | 75-85% | 580-620 scores | Specialize in bad credit, flexible underwriting |
| VA Lenders (Veterans United) | 580 | 80-90% | Veterans with bad credit | 0% down, lower rates than FHA |
| Credit Unions | 600 | 65-75% | Members, relationship banking | Flexible, consider full picture |
| Online Lenders (Rocket, Better) | 620 | 60-70% | 620+ scores | Fast, automated underwriting |
| Big Banks (Chase, BofA) | 640-660 | 40-50% | Good credit only | Avoid if score under 640 |
💡 Recommendation: Apply to 3-5 FHA Specialists
Best strategy: Apply to 3-5 FHA specialists who accept 580+ scores. Submit all within 14 days (counts as 1 credit inquiry).
Expected outcome: 2-4 approvals, compare rates/fees, choose best deal. Approval odds: 75-85% if income/DTI good.
🚀 Compare Bad Credit Lenders & Get Approved!
Don't apply to lenders who reject bad credit. Compare FHA specialists who accept 580+ scores.
Compare Bad Credit Lenders →✓ 580+ accepted ✓ 75-85% approval ✓ FHA specialists
❓ FAQ: 30 Most Asked Questions About Bad Credit Mortgages
1. Can I get a mortgage with a 580 credit score?
YES! FHA loans accept 580+ scores with 3.5% down. VA loans also accept 580+ for veterans. Rates: 6.75-7.25% (0.5-1% higher than excellent credit). Requirements: Stable income, 43% max DTI, 2 years clean payment history (no 30+ day lates). Approval odds: 70-80% if you meet requirements.
2. What's the minimum credit score for a mortgage?
500 for FHA (10% down required), 580 for FHA (3.5% down), 580 for VA, 620 for conventional, 640 for USDA. Below 500: Subprime lenders only (8-15% rates, 20%+ down). Reality check: Most lenders set their own minimums higher (620-640) even for FHA. Shop lenders to find ones that accept lower scores.
3. How can I improve my credit score fast?
90-day plan: (1) Pay down credit cards below 30% utilization (+30-50 points), (2) Dispute errors on credit report (+10-30 points), (3) Become authorized user on good account (+20-40 points), (4) Pay all bills on time (prevent drops), (5) Don't apply for new credit (avoid inquiries). Expected gain: +60-120 points in 90 days. From 580 to 700 = save $68K in interest!
🏆 Bad Credit? No Problem! Get Pre-Approved Today!
Don't let bad credit stop your dreams. FHA lenders accept 580+ scores. Get pre-approved in 24 hours and see your options.
Get Pre-Approved with Bad Credit →✓ 580+ accepted ✓ FHA specialists ✓ 70% approval rate