Last Updated on October 1, 2023 by Eric Jeanette
500 Credit Score Mortgage Options
There are not a lot of mortgage lenders that offer home loans to borrowers with credit scores below 580. Fortunately, there are some non-prime mortgage lenders that specialize in helping people with bad credit. This includes options for people with credit scores between 500-579 (or even below 500).
There are mortgage options for borrowers who have credit scores as low as 500 with a 10% down payment.
Mortgage Lenders that Accept 500-579 Credit Scores
Below are 8 of the top bad credit mortgage lenders that offer programs to borrowers with credit scores between 500-579. These lenders offer what are known as “non-prime loans“.
These lenders have guidelines that are constantly changing. Just contact us here and we will match you with the lender that perfectly fits your needs.
1.) FHA Lenders – Contact
2.) Angel Oak Mortgage Solutions – Contact
3.) Carrington Mortgage Services – Contact
4.) Acra Lending – Contact
5.) Northstar Funding – Contact
6.) A&D Mortgage – Contact
7.) ACC Mortgage – Contact
8.) HomeBridge Financial – Contact
These are 8 of the mortgage lenders that accept a 500 credit score when applying for a mortgage. Some of these lenders also do not require any waiting periods after a bankruptcy, foreclosure, or short sale. This means that you that may be able to get a mortgage immediately after such events.
If you would like some assistance finding a lender, we can help match you with a lender in your location.
Click here to get matched with a mortgage lender
FHA Loans for 500-579 Credit Scores
Can you get an FHA loan with a 500 credit score? Yes, you can get an FHA loan with credit scores down to 500.
Most FHA lenders require that you have a credit score of 580 or higher in order to get an FHA loan. However, there are some FHA lenders that will work with borrowers with credit scores between 500-579. If you would like to see if you qualify for an FHA loan, we can match you with an FHA lender. To have an FHA lender contact you, fill out this form.
Keep in mind, if your credit score is below 580, you will be required to put 10% down for an FHA loan. If your credit is above 580, you may qualify for a 3.5% down payment.
Lenders may also be looking for compensating factors when your scores are between 500-579. Some of these compensating factors may include a low debt to income ratio or excess reserves after closing. These are the two most common factors that would help with your FHA loan approval.
Adding a cosigner will help to bring additional income to the application, but it does not help with low credit scores.
USDA Loan with a 500 Credit Score
USDA guidelines permit credit scores as low as 500. In fact, there is no minimum credit score requirement for USDA loans. However, the difficulty is finding a lender who is able to originate loans with scores that low.
We know the USDA loan guidelines also have property location requirements. The property must be located in an area designated as being “rural” by the USDA.
USDA loans also have income limits which means if you earn too much, you may not quality. The program is designed for people who are at or below the median income level for your area.
Read our article about how to qualify for a USDA loan to see whether this option makes sense for you.
500 Credit Score VA Mortgage Lenders
The VA guidelines do not have a credit score minimum which means you can buy a house with a 500 credit score using a VA loan. Although credit scores in the 500’s are permitted, in some instances you may need a down payment. It will be based upon what the automated findings reveal.
Some factors that will help your approval chances include high income, low debt to income ratio, reserves, and a steady employment history. VA disability income is considered to be stable and an alternative to having a job. Read more about qualifying for a VA loan.
The good news is we do work with a few lenders who are willing and able to help if your scores are 500 or more. They will work with you to fit any potential credit issues or disputes, but the score itself will not prevent you from buying a home with a VA loan. Just contact us here and we will help you to get pre-approved.
Wells Fargo 500 Credit Score Home Loan
In the past, we have seen advertisements for the Wells Fargo 500 credit score home loan. We recently spoke with one of their loan consultants to ask if they can help consumers with credit scores down to 500.
The response we received was there are no programs that Wells Fargo is offering that will allow for credit scores down to 500. As a result, Wells Fargo is not going to be an option for you with credit scores in the low 500’s. Their minimum credit score requirement for a home loan will be in the low 600’s.
If you need help with scores as low as 500, then complete this short form and we will contact you.
Home Equity Loan with a 500 Credit Score
Lenders who offer home equity loans or HELOCs will need credit scores to be over 620. With those programs, you keep your primary mortgage in tact but secure a home equity loan or HELOC as a second mortgage to cash out equity.
If you have poor credit, you can still cash out equity but it will be in the form of a cash out refinance. This involves refinancing your current mortgage for a higher amount cashing out the equity that you need all at once.
What Others are Saying
Eric Jeanette – “You can qualify for a mortgage with a 500 credit score if you have compensating factors that will minimize risk for the lender”
Gustan Cho – “In today’s economic environment, it is important to have lenders who can help with a 500 credit score”
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