TOP BAD CREDIT HOME LOANS: For First-Time Buyers & Veterans with Guaranteed Approval

bad credit home loans guaranteed approval for veterans first time buyers

The home-buying process is complicated and can cause a lot of anxiety, especially if you worry that your credit score will prevent you from being approved for a loan. The good news is that some loan providers still give serious consideration to applicants with credit scores as low as 580. This article gives an in-depth explanation of bad credit home loans for first-time buyers and veterans. We also added a list of some bad credit home loans guaranteed approval you can consider whenever you need a mortgage even with bad credit. Enjoy the ride!

What Are Bad Credit Home Loans?

There is no minimum credit score that will automatically prevent you from receiving a mortgage, but a lower score will make it more difficult to find a lender willing to approve you for a loan. A credit score of 620 or above is normally required to qualify for a traditional conforming loan, although a lower score may be acceptable for a mortgage with government backing. However, a credit score of 740 or better is assumed by the majority of mortgage lender advertisements offering the best interest rates. The following are some bad credit home loans you can go for:

#1. FHA Loans

If you want to buy a home but have low credit, an FHA-insured mortgage may be a good alternative because FHA lenders have relatively loose standards. With a down payment of 10% or more, the minimum credit score required by the FHA is 500, while the minimum required to make the minimum 3.5% down payment is 580.

Unlike conventional loans, the waiting period for an FHA loan is shorter following serious credit concerns like foreclosure, bankruptcy, judgments, or tax liens. FHA loans come with two types of mortgage insurance premiums: an upfront cost and an annual premium, respectively, to balance the risk inherent in these more relaxed borrower standards. It is sure one of the bad credit home loans you can go for.

#2. VA Loans

VA loans are one of the available bad credit home loans in the U.S. The U.S. Department of Veterans Affairs (VA) loans, which are available to active duty service members, veterans, and qualifying surviving spouses, do not necessitate a down payment. While there is technically no required credit score in order to qualify for a VA loan, most lenders want a score of 620 or better. VA loans have a funding charge that can be paid in cash at closing or financed into the loan. However, this cost is a percentage of the loan amount.

#3. USDA Loans

Borrowers in rural areas can apply for a mortgage either directly with the USDA or through a lender that has been approved by the USDA. Low- and middle-income borrowers in certain rural areas are eligible for these loans. Eligibility is usually determined by the area’s population size.

#4. CitiMortgage®

Citi’s HomeRun mortgage program allows applicants to make down payments as low as 3% without having to pay private mortgage insurance (PMI), a monthly charge that is typically required with other mortgage plans if the down payment is 20% or less and can easily eat into a monthly budget. You can use this program to refinance your mortgage even if you have previously acquired a home.

With a HomeRun mortgage, you may secure a fixed interest rate for the life of the loan, eliminating the risk of paying higher rates in the future. Borrowers with a credit score of 680 or higher can qualify for a loan amount of $647,200 ($970,800 in Hawaii/Alaska) with this mortgage program.

#5. Fannie Mae HomeReady® loans

In order to qualify for a conventional HomeReady® loan, borrowers lacking credit scores can use other credit sources, such as on-time bill payment history. It is sure one of the best bad credit home loans you can go for. Borrowers who put down less than 20% of the purchase price will be required to pay for private mortgage insurance (PMI), even though the minimum down payment is only 3%.

#6. Rocket Mortgage

Recently, Rocket Mortgage has risen to prominence as one of the largest mortgage providers in the United States. While the standard minimum credit score required by mortgage lenders is 620, Rocket Mortgage can work with those who have scores as low as 580. Even before registering, individuals can improve their credit score with the lender’s free Fresh Start program. Note that the higher end of the lender’s APR range may apply if your credit score is poor and you apply for a mortgage.

For homeowners looking for a 0% down payment alternative, Rocket Mortgage may not be the best choice because it only offers conventional, FHA, VA, and jumbo loans but not USDA loans. 

Bad Credit Home Loans for First-Time Buyers

First-time home buying is an exciting experience, but the mortgage application process can be daunting if you aren’t prepared. It’s natural to worry about being denied a mortgage if you have poor credit. Lenders will look at your credit report when you apply for a mortgage. The impact of problems like CCJs and IVAs will be greater than that of simple payment delays. Lenders will want to know more than just your credit score and will take into account factors like the dollar amount and length of time since any unfavorable issues occurred. The following are bad credit home loans for first-time buyers:

#1. Rocket Mortgage

Rocket mortgage is one of the best bad credit home loans for first-time buyers. Here are some things to know about them:

  • America’s largest mortgage lender.
  • The entire process is completed online.
  • Options for new mortgages and refinancing existing mortgages.
  • Award-winning customer service and cutting-edge digital platforms.
  • More than 90% of clients would recommend them.

#2. Quicken Loans

Quicken loans are one of the available bad credit home loans for first-time buyers that you can consider. Check out some stuff about them:

  • Best for cash-out refinance.
  • eClosing allows customers to close electronically, greatly speeding the process.
  • A+ rating with the BBB.
  • Receive cash for home improvements, college tuition, or paying off debt.
  • 24/7 access to your loan through the Rocket Mortgage app.

#3. eMortgage

eMortgage is one of the bad credit home loans for first-time buyers you can opt for. Here are some things about them:

  • Get today’s mortgage rates from the top mortgage lenders and banks.
  • Easily compare and choose mortgage lenders with no obligations or fees.
  • Review current mortgage rates side by side.
  • Pick mortgage lenders that meet your specific needs.
  • Compare rates from pre-qualified and approved mortgage lenders — 100% online, 100% free.

5 Steps to Get Bad Credit Home Loans for First-Time Buyers

The following are the steps to take to get bad credit home loans for first-time buyers:

  • Clean Up Your Credit Report
  • Look for First-Time Home Buyer Programs
  • Use a Lender with Flexible Credit Requirements
  • Save as Much of a Down Payment as Possible
  • Avoid Becoming “House Poor” By Sticking to a Budget

Bad Credit Home Loans for Veterans

Although VA loans are a great perk of military service, just because you qualify for one doesn’t imply you’ll actually obtain one. You must meet the lender’s credit score, credit history on your credit report, and income loan conditions to qualify for a VA-backed home loan.  Therefore, the choice of bad credit home loans for veterans is crucial. Lenders utilize credit scoring to help make lending decisions, but the minimum score required by different VA lenders might vary widely. 

Below is a list of some of the credit flexibilities available to bad credit home loans for veterans:

#1. There Is No Minimum Required Credit Score

The VA does not mandate a minimum credit score, although many lenders have a threshold of 620 before approving a loan. However, your rent or mortgage payments over the past 12 months will be rigorously examined. If you can provide documentation of active duty deployments or medical issues that prevented you from making payments on time, you may be able to improve your credit score.

#2. The 2-Year Waiting Period after a Chapter 7 Bankruptcy

The VA understands that problems arising from military service might lead to insolvency. Veterans can qualify for a fresh VA loan two years after their bankruptcy discharge date (as opposed to the standard four years).

#3. 12 Months of Payments on a Chapter 13 Bankruptcy or Credit Counseling

Veterans with a Chapter 13 bankruptcy or credit counseling plan who have made 12 on-time monthly payments may be eligible for a new VA loan.

#4. The 2-Year Waiting Period after a Foreclosure

Veterans Affairs loans are available to military applicants who lost a home to foreclosure two years after the closing.

#5. Leniency in VA Foreclosure Cases

Veterans with a previously foreclosed VA loan on their certificate of eligibility are still eligible to apply for a new VA loan. You may be able to buy a new house with no down payment if you have enough unused VA entitlements.

#6. Lack of a Credit Record

It’s possible that returning veterans won’t have enough of a payment history to qualify for a standard credit score. If so, VA lenders may look at your rental, utility, auto insurance, and other payment histories to determine your eligibility.

#7. Discretionary Funds

The VA employs an original formula that takes into account your disposable income after paying regular bills and keeping up with home maintenance. The ability to save money each month, or “residual income,” can help you get approved for a VA loan even if you have poor credit.

Types of Bad Credit Home Loans for Veterans

The VA credit standards are essentially the same whether you’re applying for a loan to refinance or buying a house with bad credit. The following are the types of bad credit home loans for veterans:


Borrowers who are Veterans of the United States Armed Forces may be able to purchase a home with a $0 down payment and avoid paying mortgage insurance, which is typically required for loans with a down payment of less than 20%. Lenders will look at your payment history for the past 12 months of rent and other payments if your credit scores are poor.


With a VA loan, borrowers can take out a loan for up to 90% of their home’s worth, giving them access to additional funds for renovations or the consolidation of high-interest debt. You can improve your credit history and avoid getting a bad credit mortgage in the future by using a VA cash-out refinance to pay off high-interest credit card debt.


 Current VA loan borrowers can qualify for a VA IRRRL by showing they have paid all payments on time for the preceding 12 months. No appraisal or proof of income is necessary, and fees can be rolled into the loan amount. Your lender may still submit your IRRRL for VA approval even if you are more than 30 days behind on your most recent mortgage payment.

Bad Credit Home Loans Guaranteed Approval

The following are bad credit home loans guaranteed approval:

#1. LendingTree

Since its founding in 1996, LendingTree has facilitated more than 55 million loans totaling $250 billion or more. Those with poor credit can benefit from the company’s assistance in securing competitive mortgage rates. The service does not function as a middleman or a mortgage bank. Instead, it provides a number of different loan offers from different lenders, making it simple to find the best one.

The platform’s competitive nature forces mortgage bankers and brokers to compete with one another for the business of borrowers by offering lower rates and fees. The steps involved in LendingTree are easy to follow. The first thing to do is to apply, either online or by dialing a toll-free number. In order to retrieve your credit report, you’ll need to provide information about yourself, including your assets, debts, gross income, length of time at your present work, and Social Security number. It uses this data to choose which lending institutions to send your application to.

 #2. FHA Rate Guide

It might be challenging to locate the best mortgage lenders when house hunting. Having negative credit might make things even more challenging.  FHA Rate Guide is a web-based service that links borrowers in search of FHA loans with reputable financial institutions. To apply for the most suitable loan for your needs, fill out our comprehensive application form. If you’re planning to refinance or take out a new loan, the FHA Rate Guide on this site will be a great resource. The time and energy you save using this manual to find the best mortgage will be substantial. So, how do you become qualified to participate?

The FHA rate guide can help homeowners with poor credit find the best possible mortgage lenders to help them refinance and access their home’s equity.  However,  in order to proceed with the online application process, you must be at least 18 years old, a U.S. resident, and legally able to enter into a binding contract.

#3. Wells Fargo Home Mortgage 

The name Wells Fargo is practically a household one. It is one of the largest lenders in the United States and an international financial services corporation. Home equity loans and lines of credit (HELOCs) are among the many mortgage options available to borrowers. Options are available through the Easy to OwnSM program even for those with low incomes and poor credit histories. Mortgage rates offered by Wells Fargo are listed on their website and are kept up to date daily.

Mortgage applicants with poor credit can still get affordable rates from this organization, and the prices for those with excellent credit are extremely competitive. Keep in mind that the Wells Fargo prices advertised online often count on a high FICO score (740+) and a 20% down payment.

#4. PNC Bank Mortgage

Bad-credit borrowers can choose from a variety of loan products and terms provided by PNC Bank Mortgage, such as flexible PMI coverage. Borrowers seeking a low down payment mortgage, especially those with low to moderate incomes who may meet the criteria for a PNC cash grant, might consider PNC as a viable alternative. PNC’s pre-approval is binding on all borrowers and includes a firm offer to lend. 

PNC has a wide variety of loan options, so there’s something for everyone. The Federal Housing Administration (FHA) loan and the United States Department of Agriculture (USDA) loan are two of the most popular types of government-backed mortgages, and both are available from PNC. These loans can provide funding of up to $5 million. The organization provides a number of loan options to help people enter the housing market without having to shell out a ton of money upfront.

How to Boost Your Chances of Being Approved for Bad Credit Home Loans

It’s good to know that your chances of qualifying for bad credit home loans can be improved even if you have a low income, a low credit score, or negative marks on your credit history. The following are ways to boost your chances of being approved for bad credit home loans:

#1. Learn Your Credit Report Contents

Your credit reports may contain incorrect information. Before you start looking into bad credit house loans, you should get a copy of your credit report from each of the three major credit agencies at and check it for inaccuracies.

#2. Ensure That Your Credit Record Is Free of Mistakes and Old Debts That Have Been Paid

You can use these steps to dispute inaccurate information on your credit reports and have it deleted from your files. Even if you’ve paid off an old collection account, the entry may remain on your credit report. In some situations, you may be able to negotiate with the creditor for the immediate removal of the negative item from your credit report in exchange for full payment of the obligation. Your creditor is under no obligation to agree, although they often will.

#3. Raise the Initial Investment Amount

Putting more money down shows lenders that you are a responsible borrower and increases your chances of securing a loan. With a larger down payment for an FHA loan, borrowers with credit scores as low as 500 may be eligible for financing. The interest rate on your mortgage and the amount you pay at closing can both benefit from a larger down payment.

You can save for a higher down payment by making a budget to find ways to minimize spending or by starting a side job to produce extra money. You might also put any one-time windfalls toward the down payment, such as a tax refund or a bonus. Also, you can ask family and friends for a gift of money to go toward your home purchase if they are willing and able to do so.

#4. Pay Down Debt and Lower Your DTI

The ratio of your total monthly debt payments to your monthly gross income is one metric used by lenders to determine loan eligibility. Divide your total monthly debt payments (including your mortgage payment) by your gross monthly income to get your DTI ratio. Aim for a percentage of no more than 43% if you want to buy a home with bad credit. However, the maximum DTI allowed varies from loan to loan.

#5. Pay Attention to Punctuality Records

Three-fifths of your credit score is based on how reliably you make payments. One of the easiest strategies to boost your credit score and raise your chances of acquiring a home loan with terrible credit is to maintain a perfect payment history. You may wish to postpone your mortgage application if you have a history of being late on payments.

#6. Compare Several Loan Companies

Borrower requirements and interest rates will differ from lender to lender, so it’s important to shop around when looking for bad credit mortgage lenders. A local credit union, for instance, might have more lenient terms than a large national bank, and a private loan program might be available to you via an online lender. It’s also in your best interest to shop around and compare rates and terms offered by other lenders.

#7. Get a Cosigner or a Joint Borrower

It’s possible to lower your DTI and increase the amount you’re eligible to borrow by using the income of a cosigner or co-borrower, however, this isn’t an option with every loan program. FHA loans, for example, have a requirement that borrowers live in the property they purchase, but you can use the income of a co-borrower or cosigner who lives in another state to help you get approved for a mortgage even if they don’t plan to move in.

#8. Seek a Lower Loan Amount

If you’re having trouble getting approved for a loan, lowering the amount you need is one option. Manufactured homes are a common choice, especially in rural locations. Manufactured homes today can look very similar to site-built homes for only about $72 per square foot, compared to about $144 for a similarly sized stick-built home.

What is a Good Credit Score for a First Time Home Buyer?

Homebuyer assistance programs have a minimum credit score requirement of 640 for first-time purchasers. However, a score of 680 or more is typically required for a conventional mortgage. It can be worth your time to research credit repair services in your area.  When you choose a reputable service to fix your credit, you won’t have to worry about pursuing legal action against those responsible for any mistakes that may have been made.

What Credit Score Do You Need to Refinance Your Mortgage?

Different types of mortgages have different minimum credit scores needed to qualify for a refinance loan. However, a conventional mortgage lender will often want a credit score of 620 or higher.

How Long Do Lenders Look at Positive Credit History?

Lenders typically require a positive credit history of 12-18 months. Also, no payments are overdue, and amounts are kept to a minimum.

Final Thoughts

If you have bad credit, you can still get a mortgage. Getting the best rates will require careful consideration, and you may want to learn more about FHA loans. You should make efforts to raise your credit score before applying for a bad credit home loan. A higher credit score makes it more likely that you will be approved for a loan with terms that are more agreeable and a lower interest rate. Consider getting a bad credit debt consolidation loan to simplify your repayment plan, reduce your interest rate, and raise your credit score. You’ll have a better shot at getting a traditional mortgage if you do these things.


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