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Can I Get a Home Loan with Bad Credit?

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By Chandler Sullivan
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Posted in: Home Buying
Man sitting in his home office.

Revised By Jennifer Tucker
April 9, 2025
10 Min. Read

Can I Get a Home Loan with Bad Credit?

Buying a house is one of the biggest financial decisions many people make in their lifetime. Whether you’re a first-time home buyer or have purchased a home before, it can be an intimidating process with a lot of unanswered questions—especially if you’re looking for a bad credit home loan.

But having a low or bad credit score shouldn’t dash your dreams of homeownership. It is possible to get a home loan with bad credit. We’ll help you understand what your credit score means and why credit is important when getting a home loan.

What Does My Credit Score Mean?

One of the most important things to consider when buying a house and applying for a loan is your credit score. Your credit score is what lenders use to determine the likelihood you will repay a loan or credit card bill. Scores range from 300 to 850. There is a lot to know about credit, and you should fully understand your credit score before you move forward with applying for a mortgage loan.

What is a Bad Credit Score?

The FICO score model considers scores of 580 and below as “low” or “bad.” Although the definition of a bad score will vary by lender, your FICO score is a good gauge to determine where you stand.

Why Credit is Important When Getting a Home Loan

Your credit score plays an important role in the home loan process because it gives lenders a snapshot of your financial history and helps them assess your reliability. Here’s why credit is so important when applying for a home loan:

 

  • Determines Eligibility. Most lenders have minimum credit score requirements you must meet in order to qualify for a mortgage. While some programs are more flexible than others, your credit score influences your ability to qualify for a loan.
  • Affects Interest Rates. Your credit score directly impacts the interest rate you’ll be offered on a loan. A higher credit score generally means a lower interest rate, which can save you money over the life of the loan. A lower credit score often means a higher interest rate, which will increase your monthly payments and overall cost to borrow.
  • Influences Loan Terms. Lenders may offer different loan terms based on your credit score. For example, with a higher score, you might qualify for a lower down payment requirement, while a lower score might mean you have to put more money down to secure the loan.
  • Impacts Loan Amount. Your credit score can also affect how much you’re approved to borrow. Lenders may hesitate to offer large loans to borrowers with bad credit, even if you can demonstrate steady income.
  • Shows Financial Responsibility. Your credit score reflects your financial responsibility and reliability over time. Lenders want to see that you have a history of making payments on time, managing debt responsibly, and not overextending your budget.

 

While credit is a critical factor in assessing your eligibility for a mortgage, it’s not the only one. Lenders also consider your income, employment history, debt-to-income ratio, and savings. Even with bad credit, it’s possible to qualify for a home loan—especially if you work with a lender willing to help you explore alternative options and provide guidance.

 

What Mortgage Lenders Work with a Low Credit Score?

This Lender Search List from the U.S. Department of Housing and Urban Development can help you find lenders offering mortgage rates with good terms for bad credit. Marine Credit Union’s knowledgeable mortgage loan officers are also here to help.

 

 

Finding HOME

At Marine Credit Union, we believe financial education and homeownership create opportunities for personal stability and community growth. Finding HOME is a free program offered to anyone who wants the opportunity to own a home and achieve financial security.

The Finding HOME program is offered through the Marine Credit Union Foundation and provides free financial education to individuals and families who may have trouble with homeownership. Upon successful graduation from the program, Finding HOME guarantees access to a market-rate mortgage that fits your budget.

Check out Finding HOME to see if it would be right for you or check out other state and local programs that can help.

Finding Home

 

Learn More About Home Loans/Credit

  • Chandler Sullivan

    Chandler Sullivan

    Chandler Sullivan is a copywriter specializing in a wide range of topics including personal finance, psychology, childcare, education, and scientific research. She has skills in writing and research with experience in digital marketing, sales, and social media. She graduated from UW-La Crosse with a B.S. degree in Psychology and a minor in Professional Writing in La Crosse, WI. She has worked for companies based in the Milwaukee, WI area and the Chicago, IL area doing SEO and copywriting.

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