Bad credit doesn't automatically disqualify you from getting a mortgage, but it will affect your interest rate, your loan options, and how much you'll pay over the life of the loan. Our calculator helps you estimate your monthly payment based on your loan details. If your credit score is below 700, adjust the interest rate upward to get a more realistic picture of what lenders are likely to offer you.
Pro tip: Lenders price mortgage rates based on credit risk. If your score is in the 620–659 range, try increasing the interest rate by 1–1.5 percentage points above the current average. For scores between 580–619, add 2 percentage points or more. The difference in monthly payment, and total interest over 30 years, may surprise you.
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How credit score affects your mortgage rate
Your credit score is one of the most important factors lenders use to determine your interest rate. The lower your score, the higher the rate — and even a 1% difference in rate adds up to tens of thousands of dollars over a 30-year loan.
Here's a general picture of how credit score bands typically affect mortgage pricing.[1]
| Credit score | Loan options | Rate impact |
|---|---|---|
| 760+ | All loan types | Best available rates |
| 700–759 | All loan types | Slightly above best rates |
| 660–699 | Most loan types | Moderate rate increase |
| 620–659 | FHA, VA, some conventional | Notable rate increase |
| 580–619 | FHA, VA (with lender approval) | Significant rate increase |
| 500–579 | FHA with 10% down only | Highest rates; limited options |
| Below 500 | Generally not eligible | Most lenders will decline |
Loan options for bad credit borrowers
FHA loans: The most accessible option for borrowers with credit scores as low as 580, or 500 with a 10% down payment. FHA loans are government-backed and allow lenders to approve borrowers they otherwise wouldn't. The trade-off is mandatory mortgage insurance for the life of the loan in most cases.[2]
VA loans: Available to eligible veterans, service members, and surviving spouses with no minimum credit score set by the VA itself, though individual lenders typically require 580–620. VA loans carry no monthly mortgage insurance, making them one of the best options available for eligible borrowers with imperfect credit.[3]
USDA loans: For eligible rural and suburban properties, USDA loans offer 0% down with flexible credit requirements. Most lenders look for a 640 score, though exceptions exist.[4]
Conventional loans: Generally require a minimum score of 620, with significantly better terms available at 700 and above. Below 660, expect higher rates and possibly higher down payment requirements.
How to get help with a bad credit mortgage
Lender requirements vary more than most borrowers realize. Some lenders specialize in working with lower credit scores and offer more flexible overlays than large retail banks. A mortgage broker can match you with lenders most likely to approve your situation — and at the best available rate for your credit profile.
Best Interest Financial has the experience to help. With decades of experience and over $1 billion in closed loans, their team specializes in finding solutions for borrowers. Talk with a Best Interest loan officer about your options.