July 1st 2025.
Are you worried that your credit history might prevent you from achieving the dream of homeownership? It's a valid concern, but the good news is that there are mortgage lenders out there who are willing to consider applicants with less-than-perfect credit scores.
According to CNBC Select, a traditional mortgage lender typically requires a credit score of at least 620 to approve a potential homeowner. But if your score falls short of that number, don't lose hope. There are still options available to make your dream of owning a home a reality.
From private lenders to government-backed loans, there are lenders who offer more flexible credit requirements. CNBC Select even compiled a list of these lenders who cater to individuals with a less-than-stellar credit history.
For example, Rocket Mortgage offers low interest rates for FHA loans to borrowers with a credit score of at least 620. And even if your credit score is lower than that, you may still be able to get an FHA loan with a 10% down payment if your score is at least 500. On top of that, Rocket Mortgage is known for its high customer satisfaction ratings from J.D. Power, and they even offer a rebate of up to $10,000 for closed deals through their sister company, Rocket Homes. However, keep in mind that there are some trade-offs to this flexibility, including a hard credit check, higher origination fees, and the absence of USDA loans or HELOCs (home equity lines of credit).
Guild Mortgage is another option for those without a traditional credit history. They consider on-time rent, insurance, and utility bill payments in order to establish a credit history for borrowers. They also offer FHA, VA, and USDA loans for individuals with a credit score of 540 or higher, making it easier for those with lower credit scores to qualify.
For non-qualifying mortgages, Carrington Mortgage Services is an option for individuals with a credit score as low as 540. They offer a non-QM Flexible Advantage loan, which can be helpful for self-employed borrowers or those with a previous bankruptcy. However, they do not offer HELOCs or home equity loans if you choose to mortgage your property through them.
According to the National Association of Realtors® 2025 Snapshot of Race and Home Buying in America, Black homeownership still lags behind white homeownership by nearly 30 percentage points. While there has been progress, affordability challenges still remain for Black homeowners. In fact, the majority of Black mortgage applicants face denials from lenders, with 21% being turned down.
Investopedia reports that the median credit score for Black communities is 582, which creates barriers to achieving homeownership. This is why it's important to highlight and support lenders that are willing to consider individuals with lower credit scores, as it can help close the racial gaps in homeownership.
Other featured lenders include USAA, which caters to veterans and active-duty military members. While it's exclusive to this demographic, USAA offers 0% down payment for most loans, even if you don't have a traditional credit history. And for those looking for a quick closing, CrossCountry Mortgage is a good option, with down payment assistance available for first-time buyers.
If owning a home is your ultimate goal, don't be discouraged by your credit score. There are lenders out there who are willing to work with you, regardless of your credit history. With determination and the right lender, you can make your dream of homeownership a reality.
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