Top Mortgage Lenders for Bad Credit in June 2025—Best Options to Buy a Home Now

Worried your credit score is too low to get a mortgage? You’re not alone—and you still have options.

Getting a home loan with bad credit may be harder, but the right lender and loan program can make all the difference.

Whether you’re a first-time buyer, veteran, or looking to refinance, here are the best mortgage lenders for bad credit borrowers in June 2025—and what makes each one a top pick.

You might be missing out on benefits—check what’s available to you here.

Best Overall Mortgage Lender for Bad Credit: Bank of America

Why it's a top choice:

• Home buying grants up to $7,500

• Down payment assistance up to $10,000 (varies by location)

• Strong customer service and low mortgage rates

• Offers FHA and other government-backed loans ideal for poor credit

Best FHA Lender for Bad Credit: Pennymac

Top features:

• #1 FHA lender in the U.S.

• 1% interest rate buydown for year one + $1,000 bonus at closing

• Easy-to-use online tools and mortgage education center

• Ideal for buyers with credit scores as low as 580

Best VA Lender for Military Borrowers: Navy Federal Credit Union

Why it stands out:

• Offers no-down-payment VA loans

• Flexible on past bankruptcies or foreclosure

• Up to $9,000 cash back at closing when using partner agents

• Open to military members, veterans, and eligible families

Best for Fast Approval: Rate (formerly Guaranteed Rate)

Key highlights:

• Get approved within 24 hours with their "Same Day Mortgage"

• Accepts higher debt-to-income ratios—helpful if you have other loans

• Wide availability of branch locations for in-person help

Heads-up: Some borrowers may see slightly higher rates and fees.

Best for Down Payment Help: U.S. Bank

Why it's great:

• Offers up to $12,500 in assistance for closing costs, down payment, or repairs

• $5,000 lender credit available to eligible borrowers

• Pays mortgage insurance for qualifying loans

• Excellent support for first-time buyers with low credit

Best Refinance Option for Poor Credit: Flagstar Bank

Why we recommend it:

• Known for FHA Streamline Refinancing—less paperwork, no appraisal

• Special loans for home renovations (FHA 203(k))

• Offers ITIN loans for borrowers without a Social Security number

What’s the Best Home Loan for Bad Credit?

The best option for most buyers is an FHA loan, backed by the government:

• Credit score 580+: just 3.5% down

• Credit score 500–579: requires 10% down

Other good choices:

• VA loans – No down payment, flexible credit (must be military-connected)

• USDA loans – For rural areas, low- to moderate-income households, credit-friendly

Refinance with Bad Credit: What to Know

Refinancing options for low credit borrowers:

• FHA Streamline Refinance – no credit check or appraisal needed

• VA IRRRL – simple, fast VA refinance (also called "Earl")

• USDA Streamline – allows refinancing with as little as $50 monthly savings

Need cash? Consider an FHA or VA cash-out refinance to tap your home’s equity.

How to Get a Mortgage With Bad Credit

Here’s how to increase your chances:

1. Compare lenders – Some will offer better terms for your score

2. Get preapproved – You’ll receive a Loan Estimate outlining your rates and fees

3. Ask about assistance – Grants, lender credits, or FHA programs may help

4. Understand your monthly payment – Know what you’ll owe including taxes, insurance, and PMI

5. Take your time – Don’t rush. Ask questions and review all paperwork carefully

Getting a mortgage with bad credit is absolutely possible in 2025.

By choosing the right lender and understanding your options, you can still move forward with your dream of owning a home.

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