Best Mortgages for People With Bad Credit

by Susan Paige
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Whether you’re looking to purchase your first home as a couple, or you want to renovate an old house, you might consider getting a mortgage. However, even if you have a poor credit rating, that doesn’t mean it would be impossible to purchase your dream home. That being said, here, you will find the best options for people with a bad credit score. 

VA Loans

VA Loans are offered by mortgage companies, banks, and other lenders. To be eligible for a VA loan, you have to be a veteran or a surviving spouse. There are many befits to VA loans, including no down payment, no mortgage insurance, and no minimum credit score requirements, among other benefits. Still, there is a requirement for a debt-to-income ratio of 41%, which is another factor that determines if you qualify for a VA loan. It should be emphasized that the limit of VA loans is approximately $510,400 for most U.S. counties

A good option for working and retired members of the military and their families is offered by the Navy Federal non-profit organization. The organization was established in 1933 in Vienna, Virginia, and since then, it has attracted over 8 million members.  They offer a number of services at low rates, including banking services, personal loans, student loans, mortgage loans, among other types of services and products. 

Navy Federal is a solid option if you’re looking to buy a home, and you need a mortgage. Some of the advantages of the loan offered by the Navy Federal are minimal down payments, and there aren’t requirements regarding the credit rating and debt-to-income ratio for their members. If you’re interested to learn more about the mortgage, covers it here, along with more information about how Navy Federal works as an organization, their mortgage loan options, and the application process.

FHA Mortgage 

This type of loan is a good option for people with bad credit score, lower-income, or little savings, It is offered by credit unions, banks, and other FHA approved lenders. To qualify, you need to have  a credit score between 500- 580, and you need to make a down payment of 10%.  In case you have a credit score of 580, you might qualify for an FHA loan that requires a down payment of 3.5%. Keep in mind that you won’t qualify for this type of mortgage if you have gone through bankruptcy. 

This mortgage is a good option if you want to buy a new single-family home, mobile home, make renovations, refinance a mortgage. It’s also worth mentioning that you also need to check the specific requirements of the FHA lenders because they have the final decision.

Citi HomeRun Mortgage

This mortgage is a good option for people with low to moderate incomes, as it offers affordable payments and low-down payments. In fact, the down payment is as low as 3% for a single-family home, condo, or a co-op. Otherwise, there is a higher down payment of 10% for a two-unit home. 

Other requirements include less than 43% debt-income ratio and stable source of income. Furthermore, they offer fixed-rate mortgages for 30, 20, 15, and 10 years. They also offer education for home-owners and counseling, which is convenient when you’re buying a home for the first time.  

As a side note, if you’re selling one house, and buying another, you might be short of cash.   If this is case, you might want a bridging mortgage, also known as a bridge loan.  Bridge loans are generally a last option as they’re short term and have a broad variety of terms and interest rates (here).


Based on your individual financial situation, make sure to do your own research, and compare mortgages from different lenders. Also, thoroughly evaluate your financial situation, and see if you can meet the monthly payments of your mortgage. It’s important to take into consideration the long-term impact of the mortgage on your finances. Lastly, you can also look for ways to improve your credit score as you will find even more options.

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