Having a bad credit score can limit your opportunities for a loan. This is because your credit score will tell lenders how likely you are to repay a loan. Bad credit scores and credit history do not send the right signal which is why there are few lenders who accept borrowers with bad credit scores.
Back in the days, you would require a high income and credit score before you can get a loan. Today, it is easier to get a loan even if you have a credit score lower than 600.
There are various lenders who set their minimum credit score as low as 550 making it easier for most borrowers with bad credit to get mortgage loans at reasonable interest rates and loan periods
Below, we have listed various bad credit mortgage loan lenders that will consider debtors with the lowest of credit scores.
Vylla is one of the best options to consider when looking for companies that offer mortgage loans to borrowers with bad credit. This is because they accept borrowers with a credit score as low as 500. If you are seeking for a government-backed loan then Vylla is the right choice to consider. 95% of mortgage loans offered by the company are FHA, USDA or VA loans.
Vylla offers loans of up to $3 million with payment periods between 15 to 30 years. The company has many mortgage types for every borrower.
Some mortgage types require a higher credit score than 500 and you might be get approved for some loan amounts even if you have a credit score below 600.
Vylla requests for a minimum down payment of 3% of the loan amount, it also offers discount point fees which help reduce your loan interest rate.
Rocket Mortgage is another choice to consider for borrowers with bad credit, however, its minimum credit score requirement is higher than that of Vylla.
Rocket Mortgage offers 8 types of loan products with varying minimum score requirements. Among its loan types are conventional loans and government-backed mortgage loans with fixed and variable APRs.
With Rocket Mortgage, a credit score as low as 580 can get you approved, however, you will be required to make a down payment of 2% to 5% of the purchase price of the home for closing costs. This also goes for VA loans that do not require down payments.
Rocket Mortgage loan periods will depend on the loan amount and the credit score of the borrowers. Some borrowers can get a loan period up to 30 years with good interest rates if their credit scores are good enough.
J.G. Wentworth is another great option to consider if you have a credit score above 580. Almost every other requirement for qualification and its loan process is similar to those of other lenders on our list.
However, there are some cons to choosing this bad credit mortgage loan company. J.G. Wentworth does not offer lines of credit or home equity loans and it is not licensed to operate in some states in the U.S.
J.G. Wentworth offers several loans including government-backed loans like FHA, USDA and VA home loans. It also has several conventional loan products which are targeted at moderate-income home buyers making easier for every borrower to get a loan regardless of their income level.
Its loan periods are between 3 – 30 years which is long enough for borrowers to make payment. J.G. Wentworth charges origination fees but you might be charged other fees during the loan process.
With Quicken Loans your credit score and debt-to-income ratio play a big role in the loan amount you will be given and your chances of loan approval.
Quicken Loans also offer conventional and government-backed loans to borrowers for a period between 8 to 30 years.
Interest rates of loans vary and will also depend on your credit score and debt-to-income ratio. You stand a chance of getting a low-interest rate no matter the loan length if you have a credit score above 680.
Quicken Loans doesn’t offer home equity loans to borrowers and charges some fees for its services. Its origination fees are 0.5% of the loan amount, however, government-backed loans have higher origination fees. Quicken loans origination fees do not exceed 1% no matter the loan type.
With Network Capital, bad credit mortgage loans wouldn’t get any better. Network Capital charges no lender fees and offers loans up for $3 million for its Jumbo loan type. It also offers government-backed loans to lenders.
With no origination fees, you can get approved faster and get the funds disbursed to you as soon as possible. Network Capital’s interest rates vary and will depend on the credit score and the credit history of the borrowers.
Your credit history will do more than just affect your interest rate, it will also affect the loan amount you can receive and the loan period.
The downside of settling for Network Capital is that they don’t lend in every state in the United States and they don’t offer home equity products. To close the loan, you will be required to make a down payment of 3% of the total loan amount.
6. Mr. Cooper
With a credit score as low as 580, you can get approved for a mortgage loan from Mr. Cooper. Mr. Cooper offers both conventional and government-backed loans. It is one of the few loan companies that are available in all the states in the U.S.
The company charges an origination fee of 0.5% and several other fees which differ from state to state. In some states, you will be required to pay an application fee before you can begin your loan process.
Although Mr. Cooper sets a minimum credit score of 580 for its loans, this credit score doesn’t reflect in all its loan types.
VA loans have a minimum credit score of 600 as a requirement for qualification while that of FHA loans is pegged at 580. You will also be required to make a down payment of 3% of the entire loan amount.