Best Mortgage Lenders For 500 to 620 FICO Borrowers

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The Best Mortgage Lenders for 500 to 620 FICO in 2025

If you have a credit score between 500 and 620, you might think getting a mortgage is impossible. The truth? You CAN still qualify for a home loan! The key is finding the right lender that understands your financial situation and offers mortgage programs designed for low-credit borrowers.

This guide will cover the best mortgage lenders for 500 to 620 FICO, how your credit score affects your approval, and how you can get a home loan—even with bad credit.

Why Would Lenders Want to Look at Your FICO Score?

Mortgage lenders use your FICO score to measure how risky it is to lend you money. A higher score tells lenders you have a history of paying bills on time, while a lower score suggests you might have had financial struggles.

The great news is that not every lender has the same rules for credit scores! Some lenders might say no to borrowers with a 620 FICO score, while others will approve loans for those with scores as low as 500. If you find the right mortgage broker, they can help you connect with the best mortgage lenders for 500 to 620 FICO scores. Even if your credit isn’t perfect, options are available for you!

Can I Buy a Home with 500 Credit Score?

Yes! You can buy a home with a 500 credit score, but your loan options may be limited. Here’s what you need to know:

FHA Loans

If you want to purchase a house and your FICO score falls between 500 and 620, the Federal Housing Administration (FHA) can help. For scores between 500 and 579, you can get an FHA loan with just a 10% down payment. For example, on a $200,000 house, that’s $20,000 down. If your score is 580 or higher, you’ll only need 3.5%, which is $7,000 on the same home.

You need to find the best mortgage lenders for 500 to 620 FICO scores, as they understand the needs of borrowers with lower credit.

VA Loans

If you’re a veteran or currently serving in the military, you might be interested in VA loans. One great thing about these loans is that the VA doesn’t set a specific minimum credit score requirement. However, many lenders usually look for a credit score between 580 and 620 or even higher.

While the VA doesn’t have a strict score you need to hit, lenders may still want to see that you’re in decent shape credit-wise before approving your loan. It’s a good idea to check your credit score and understand your financial situation before using a VA loan to buy a home.

Non-QM Loans

Non-Qualified Mortgage (Non-QM) loans are different from regular home loans because they don’t strictly follow the usual lending rules. This makes them a great option for many borrowers. If you have a lower credit score, like between 500 and 620 FICO, or if you can’t provide tax returns, Non-QM loans can still work for you. They also offer flexible ways to prove your income, which is helpful if you have a unique job or income situation.

Hard Money Loans

If you’re buying an investment property, hard money loans offer fast approvals but have higher interest rates.

Pro Tip: If your credit score is between 500 and 620, getting a mortgage can be tough because some lenders have extra rules (lender overlays) that make it harder to qualify. But find the best mortgage lenders for 500 to 620 FICO scores, like Gustan Cho Associates. You might have a better chance of getting approved even when other lenders turn you away. They don’t have those extra rules, which can help you!

What Is the Purpose of a FICO Score for Real Estate Financing?

Your FICO score helps lenders decide:

• If you qualify for a loan
• How much interest you’ll pay
• Your down payment requirements
• What loan programs you’re eligible for

If your credit score is between 500 and 620, don’t stress. You can still find a home loan, but be ready for slightly higher interest rates and down payments. A higher credit score can help save money over the life of your mortgage, but starting with a lower score is still possible.

Many people begin with loans like FHA or VA loans, and later on, they refinance to get better rates when their credit improves. If you’re looking for options, check out the best mortgage lenders for 500 to 620 FICO scores. They can help you get started on your home-buying journey!

What FICO Score Do Most Lenders Use?

Most mortgage lenders use FICO Score 2, 4, or 5, depending on the type of loan. These models focus heavily on:

• Payment history
• Debt balances
• Credit inquiries
• Length of credit history

Even if you look at your credit score on apps like Credit Karma, it might not be the same as what mortgage lenders see. Getting pre-approved with one of the best mortgage lenders for 500 to 620 FICO scores is the smartest move to find out where you really stand.

Best Mortgage Lenders for 500 to 620 FICO in 2025

Gustan Cho Associates (Best for Low Credit Scores)

• No lender overlays
• FHA and VA loans down to 500 FICO
• Fast closings—even for bad credit borrowers
• Non-QM loans for self-employed borrowers

When finding the best mortgage lenders for 500 to 620 FICO, Gustan Cho Associates stands out. Many of our clients—over 80%—had trouble getting approved elsewhere but found success here. If you’re dealing with bad credit, GCA is your best shot at getting the mortgage you need.

Why choose us? Over 80% of our clients were denied elsewhere before getting approved at Gustan Cho Associates! If you have bad credit, this is your best option.

How to Get Approved for a Mortgage with 500 to 620 FICO

You can increase your chances of getting approved, even if your credit isn’t great. Here’s how to do it:

1. Start by looking for the best mortgage lenders for 500 to 620 FICO with no overlays

Most lenders add extra rules (overlays) to FHA or VA guidelines. Gustan Cho Associates has NO lender overlays, which means you can get approved based on agency guidelines alone.

2. Increase Your Down Payment

If your credit score is below 580, putting down 10% instead of a smaller amount can help you get approved for a loan.

3. Reduce Your Debt-to-Income Ratio (DTI)

If you want to increase your chances of getting approved for a mortgage, keeping your monthly debt payments low is important. This helps improve your debt-to-income ratio (DTI), improving your chances of AUS (Automated Underwriting System) approval from the best mortgage lenders for 500 to 620 FICO.

See our AUS BLOG for more details.

4. Improve Your Credit Score Before Applying

Simple steps like paying down credit cards, removing errors from your credit report, and making on-time payments can quickly boost your FICO score.

Final Thoughts on the Best Mortgage Lenders for 500 to 620 FICO

If your FICO score is between 500 and 620, don’t give up. You can still find help and maybe even get a home loan. It’s all about picking the right lender. The best mortgage lenders for 500 to 620 FICO scores are ready to work with you, even if other banks have said no.

💡 Ready to get started?

• Call Gustan Cho Associates at 800-900-8569
• Text us for a faster response
• Or email us at gcho@gustancho.com

📢 Our dedicated loan officers are here for you every day of the week. We focus on helping borrowers with less-than-perfect credit to realize their dream of owning a home—even when other lenders may turn them away.

Don’t wait—let’s turn your dream of homeownership into a reality today!

 

USEFUL LINK: Non-Prime Jumbo Loans With 550 FICO

Frequently Asked Questions About the Best Mortgage Lenders for 500 to 620 FICO: 

Q: Can I Get a Mortgage with a 500 Credit Score?

A: Yes! FHA loans allow borrowers with 500-579 FICO scores to qualify with a 10% down payment. VA loans also allow lower credit scores, but many lenders set their requirements. The best mortgage lenders for 500 to 620 FICO work with low-credit borrowers to help them get approved.

Q: What Loan Programs are Available for 500 to 620 FICO Scores?

A: The most common loans for low-credit borrowers include:

• FHA Loans – 500+ FICO with 10% down or 580+ FICO with 3.5% down
• VA Loans – No official minimum credit score, but lenders prefer 580+
• Non-QM Loans – Flexible options for self-employed or unique income situations
• Hard Money Loans – Good for investment properties but higher interest rates

Check out the best mortgage lenders for 500 to 620 FICO to find the right lender.

Q: Do All Lenders Accept 500 to 620 Credit Scores?

A: Many lenders have extra rules (called lender overlays) that increase the minimum credit score requirement. For example, some FHA lenders won’t approve loans under 620, even though FHA guidelines allow scores as low as 500. That’s why it’s important to work with the best mortgage lenders for 500 to 620 FICO, like Gustan Cho Associates, which follows FHA and VA guidelines without extra overlays.

Q: What is the Easiest Loan to Get with Bad Credit?

A: FHA loans are a good choice for people with low credit scores. They accept scores as low as 500, require smaller down payments, and have flexible credit history rules. VA loans are also a strong option for veterans since they don’t require a minimum credit score.

If your score is between 500 and 620, looking for the best mortgage lenders for that range can help you qualify, even if traditional banks say no.

Q: Will I Pay a Higher Interest Rate with a Low Credit Score?

A: Yes, borrowers with lower credit scores often pay higher interest rates. The lower your FICO score, the riskier you appear to lenders. However, the best mortgage lenders for 500 to 620 FICO offer competitive rates for FHA, VA, and Non-QM loans, helping you secure the best deal possible.

Q: How can I Improve My FICO Score Before Applying for a Mortgage?

A: Here are four quick ways to boost your FICO score:

• Lower your credit card balances to lower your debt-to-income ratio.
• Make on-time payments for all bills
• Dispute any credit report errors that could be lowering your FICO score
• Refrain from opening new credit accounts before submitting a loan application.

If your credit is between 500 and 620, the best mortgage lenders for 500 to 620 FICO can help you get pre-approved while you work on improving your score.

Q: How Much Down Payment do I Need if My Credit Score is Under 620?

A: For credit scores under 620:

• FHA loans: 500-579 FICO requires 10% down, while 580+ FICO needs only 3.5% down.
• VA loans: 0% down payment for eligible veterans.
• Non-QM loans: Varies by lender, usually 10-20% down.

Some of the best mortgage lenders for 500 to 620 FICO offer down payment assistance programs to help reduce upfront costs.

Q: Will Checking My Credit Score Lower it?

A: Checking your own credit score (soft pull) will NOT lower it. However, when a lender pulls your credit (hard pull), it can temporarily lower your score by a few points. The best mortgage lenders for 500 to 620 FICO will only pull your credit when necessary to protect your score.

Q: How do I Find the Best Mortgage Lenders for 500 to 620 FICO?

A: To find a lender that accepts lower credit scores, look for:

• No lender overlays (extra rules making it harder to qualify)
• Experience with FHA, VA, and Non-QM loans
• Fast approvals and personalized support

One of the best mortgage lenders for 500 to 620 FICO is Gustan Cho Associates, specializing in helping borrowers who were denied elsewhere.

Q: Where Can I Get Pre-Approved for a Mortgage if My Credit is Between 500 and 620?

A: If you need a fast pre-approval, contact Gustan Cho Associates. They work with borrowers with credit scores as low as 500 and offer FHA, VA, and Non-QM loan programs.

📞 Call: 800-900-8569

📧 Email: alex@gustancho.com

📱 Text for a faster response

The best mortgage lenders for 500 to 620 FICO are ready to help you become a homeowner—even if other lenders have turned you down!

This blog about the “Best Mortgage Lenders For 500 to 620 FICO Borrowers” was updated on February 11th, 2025.