Home Loans with a 500 Credit Score

500 credit score mortgage

A credit score of 500 still gives you an opportunity to find a mortgage based upon today’s flexible lending guidelines by some subprime lenders. Your credit score is a major factor in not only whether you can find a loan, but also what your rate will be. Your credit score also opens and closes various loan program options.

If you have poor credit, you can get approved for a 500 credit score mortgage through lenders who are offering programs that can help. 

A score of 620 is preferred but there are some bad credit lenders who can help you even with a credit 500 credit score mortgagescore as low as 500.

Below are some mortgage loan options for bad credit if you have a credit score as low as 500. Keep in mind that as scores get below 580, some of the requirements below may also change. Once you have had a chance to review the options below, then we can help connect you to a lender who can help you with bad credit.

Qualifying for a Mortgage with Bad Credit – 500 Credit Score

Today’s subprime lenders offer the widest variety of mortgage programs for individuals with bad credit. These are some of the features and benefits, as well as some of the requirements needed to qualify:

  • If you are self employed, you do not have to fully document your income and assets
  • Minimum of 15% down payment required depending upon your credit score
  • PMI is typically not required for this type of loan
  • All residential property types permitted
  • Minimum of a 2 year work history required if W2 wage earner or self employed
  • Recent bankruptcies or foreclosures are allowed

These mortgage programs are not following Fannie Mae guidelines which is why they can be extremely flexible. If you believe that you can meet the criteria listed above, it does not mean a guaranteed approval with bad credit, but it improves your chances of getting the mortgage you are looking for.

Now Check Your Credit Score (HERE)

Get Your Credit Score Here

Mortgage Lenders for Individuals with a 500 Credit Score

The list of bad credit lenders below is just a small sampling of who can help if you have a credit score as low as 500. Keep in mind there are many more than what you see below and due to varying lending guidelines, each of these may not be an option for you. We can help identify which lender would be the best fit for your loan scenario.

  1. Carrington Mortgage Services – Carrington is licensed in all 50 states and offers some mortgage programs for individuals who have bad credit. You may qualify with a credit score as low as 500.
  2. Angel Oak Mortgage – Angel Oak is another subprime lender that offers mortgages to those who have low credit scores. However, they are not licensed in all 50 states and their guidelines are often changing.
  3. Citadel Servicing – Citadel also offers subprime mortgage solutions that include programs to help with low credit scores. They are licensed in a portion of the United States and can also help if you do not have a social security number.
  4. First National Bank of America – FNBA has offered mortgages for credit scores as low as 500 in the past. However, it seems they may be raising their minimums a bit lately. They do have the ability to provide financing for individuals with no credit score at all. It is for that reason we are listing them here.
  5. Athas Capital Group – Athas Capital is a national lender that offers quite a few unique mortgage programs. However, their niche is investment properties and not so much if you are trying to finance your primary residence.

Let us help you to make sense of the various bad credit lender options out there. Click to get a free consultation and to see what your options are. 

Other Mortgage Loan Options for Bad Credit

FHA Loan Requirements With a 500 Credit Score

FHA guidelines permit lenders to allow for a 500 credit score.

  • FHA mortgage loans require both taxes and insurance to be escrowed.
  • They require you to have a mortgage insurance premium (MIP)
  • You must have a sustained history of employment (typically at least two years)
  • With credit scores of 580 or lower you may be looking at 10% down.

VA Loan Requirements With a 500 Credit Score

VA loan guidelines do not have a credit score minimum which means lenders are able to help with a VA loan with a 500 credit score.

  • You will need at least 90 consecutive days of active duty service
  • You will need 181 days of active duty service during peace time
  • VA funding fee required
  • Zero down payment required but as your credit scores get lower, there may be a down payment required.
  • You must fully document your income and assets
  • Typically a 620 credit score is required but we can get it done if your score is lower

USDA Loan Requirements with a 500 Credit Score

  • You must fully document your income and assets
  • No down payment required
  • Credit score of 640 is typically required but we can get it done with lower scores if you have compensating factors. So, contact us and we will help get this done for you.
  • The property must be in a USDA eligible location. We can help you to determine that with our lookup tool.
  • You must be employed for the past two years.

We have been helping people to finance their homes for almost two decades regardless of credit score. Please let help you by having a free consultation so we can walk through your personal scenario. Click here to get connected with us.

Frequently Asked Questions – 500 Credit Score Mortgage Lenders

Can I get a mortgage with a 500 credit score?
There are plenty of mortgage options for you with a 500 credit score. However, you will need some compensating factors to secure a mortgage approval.

How good is a 500 credit score?
A 500 credit score is considered to be “bad”. That being said, we can still help you to finance your home.

What are the interest rates when  you have a 500 credit score?
The interest rates will vary based upon the program and some other factors. You can expect the rates to be higher than if you had good credit. The two primary factors in determining your interest rate are your credit score and down payment. Read our article on how mortgage rates are determined.

What is the minimum credit score needed to get a loan?
We can help you to get a mortgage with a credit score as low as 500. In fact, there are a handful of lenders who will manually underwrite your mortgage application even if you do not have a credit score at all.

Can I get a VA loan with a 500 credit score?
There is no specific credit score requirement for VA loans which means it is entirely up to the lender to decide what credit scores they are willing to accept. If you find the right lender, you can get a VA loan with a 500 credit score.

How easy is it to raise my credit score?
It actually is not that difficult but there are professionals who can help do it quickly if you are trying to qualify for a loan. We can also help you with that. Read our article on how to improve your credit score.

Summary

If you are buying a home with bad credit and your scores are as low as 500, you can still get a mortgage. There are programs available from bad credit lenders who may approve your loan.  Poor credit no longer needs to be the reason why you cannot purchase your dream home now.

Related Articles

FHA Loan with a 500 Credit Score – FHA guidelines on how to purchase your dream home with an FHA insured loan.

Mortgages for Self Employed Borrowers – If you are self employed, find out what mortgage options you have.

Tips to Improve Bad Credit – This article discusses the various ways you can improve your credit on your own and without paying for a credit repair company.

We are able to help you to find 500 credit score lenders lenders in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Jersey, New Mexico, New York, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, West Virginia, Wisconsin, Wyoming.