Thinking about buying a home but your credit score’s in the gutter? Don’t worry — you’re not alone. Thousands of Americans with bad credit get pre-approved for mortgages every year. And in 2025, lenders are more flexible than ever.
Here’s how to boost your chances — and what to expect along the way.
1. What Counts as “Bad Credit” for a Mortgage?
Most lenders consider a credit score below 620 as “bad,” but some programs approve buyers with scores as low as 500 — yes, really. FHA loans, for example, are government-backed and designed for low-credit or first-time buyers.
If your score is:
- 580–619: You have more options than you think.
- 500–579: It’s tougher, but FHA might still say yes.
- Below 500: Time to repair before applying — but don’t lose hope.
2. Start With Lenders That Specialize in Low Credit
Not all mortgage lenders treat bad credit the same. Look for those who advertise:
- FHA loans
- VA loans (for veterans)
- Subprime mortgages
- Non-QM loans (Non-qualified mortgages)
These lenders typically offer manual underwriting, which means they look beyond just your credit score — like rent history, income, and assets.
3. Get Pre-Approved (Even With Bad Credit)
Pre-approval means a lender has reviewed your finances and is willing to lend you a certain amount. It shows sellers you’re serious — and gives you real numbers to work with.
Here’s what you’ll need:
- Proof of income (pay stubs, tax returns)
- Bank statements
- Debt-to-income ratio under 43% (ideally)
- Social Security number for the credit check
Yes, your credit will be pulled — but this is a hard pull that’s necessary for true pre-approval. Don’t fall for soft-check gimmicks if you’re serious about buying.
4. How Much Can You Borrow With Bad Credit?
It depends on your:
- Down payment
- Income
- Debt load
With an FHA loan, you can usually borrow up to 96.5% of the home’s price with just 3.5% down — if your score is 580+. With scores between 500–579, a 10% down payment is usually required.
5. Tips to Improve Approval Odds Fast
Even if your score is low today, here’s how to make it more lender-friendly fast:
- Pay off credit card debt (even $200 helps!)
- Don’t open new accounts
- Get a co-signer (if possible)
- Show consistent rent payments
Some lenders accept 12 months of rent receipts instead of a traditional credit history — especially helpful for those with thin files or non-traditional income.
6. Should You Wait or Apply Now?
If your score is close to 580, it may be worth improving it for better loan terms. But if you already qualify under FHA or another low-credit program, getting pre-approved now locks in rates and gives you a head start before prices rise again.
Pro tip: Use a mortgage broker to shop multiple lenders at once — some specialize in bad credit borrowers.
Final Thoughts
Getting pre-approved for a mortgage with bad credit is possible — and it’s the first step to homeownership for many Americans. The key is to know your options, gather your documents, and work with lenders who see more than just your score.
Next Steps?
Compare offers from at least 3 lenders and don’t settle for the first quote. A lower rate could save you tens of thousands over the life of your loan.