Can You Get a Mortgage with a 500 Credit Score in 2025?

Buying a home is a dream for many, but if you have a low credit score—especially a 500 credit mortgage score—you might feel like that dream is out of reach. The good news? While it’s definitely more challenging, getting a mortgage with a 500 credit score in 2025 isn’t impossible. Let’s break down how it works, what your options are, and what steps you can take to boost your chances.

Understanding the 500 Credit Mortgage Score

A credit score is a number that reflects your creditworthiness. It’s based on your credit history—how much debt you have, how consistently you pay your bills, and how long you’ve had credit. Scores range from 300 to 850, with anything below 580 considered "poor."

A 500 credit mortgage score puts you at the lower end of the spectrum. This score signals to lenders that you may pose a high risk of defaulting on a loan. But in 2025, mortgage lenders are becoming more flexible, especially with government-backed loan options.

Can You Really Get a Mortgage Loan with a 500 Credit Score?

Yes, mortgage loan 500 credit score options are available, but they often come with stricter conditions. Traditional loans from private banks might be out of reach, but there are other routes to explore:

1. FHA Loans

The Federal Housing Administration (FHA) offers the most accessible path to homeownership for low-credit borrowers. In 2025, FHA loans allow for:

• Credit scores as low as 500

• Down payments of 10% (instead of the typical 3.5% for higher scores)

• More flexible qualification standards

FHA is one of the most common solutions for those looking for mortgage lenders 500 credit score friendly.

2. VA Loans

If you're a veteran, active-duty service member, or an eligible surviving spouse, VA loans offer another chance. While there's no official minimum credit score, many mortgage lenders that accept 500 credit score for VA loans might still consider your application, especially if you have a strong income or large down payment.

3. Subprime Lenders

Some 500 credit score mortgage lenders specialize in subprime mortgages. These are designed for people with poor credit. However, be cautious—they often come with higher interest rates and stricter repayment terms.

What to Expect from Mortgage Lenders with a 500 Credit Score

Here’s what you’ll likely need to qualify for a mortgage with 500 credit score:

• Higher Down Payment: Most lenders will ask for at least 10% upfront.

• Proof of Stable Income: You’ll need to show consistent employment and income for at least two years.

• Low Debt-to-Income Ratio (DTI): Lenders want to make sure you can handle your mortgage payment along with other debts.

• Lender Overlays: Even if FHA guidelines say 500 is okay, individual lenders might have stricter rules (like requiring a score of 580 or more). So shop around for mortgage lenders that accept 500 credit score specifically.

Top Mortgage Lenders that Accept 500 Credit Score in 2025

While not every lender will work with low-credit borrowers, a few are more open than others:

• Carrington Mortgage Services: Known for helping buyers with poor credit.

• Newrez: Offers various loan programs including FHA.

• Angel Oak Home Loans: Specializes in non-traditional borrowers, including those with low credit scores.

• Local Credit Unions and Small Banks: Sometimes, local institutions are more flexible than national banks.

When searching for mortgage lenders 500 credit score, start with FHA-approved institutions and ask directly about their minimum score requirements.

Pros and Cons of Getting a Mortgage with a 500 Credit Score

✅ Pros:

• You can buy a home even with poor credit.

• Start building equity instead of renting.

• Opportunity to refinance later when your score improves.

❌ Cons:

• Higher interest rates.

• Larger down payment required.

• Limited lender options.

• Potentially higher mortgage insurance costs.

Tips to Improve Your Mortgage Approval Odds with a 500 Credit Score

If you want to apply now but boost your approval chances, consider these strategies:

1. Offer a Larger Down Payment: The more money you put down, the less risk for the lender.

2. Add a Co-Signer: A co-signer with good credit can help you qualify more easily.

3. Reduce Your Debts: Lowering your DTI can make your application stronger.

4. Fix Credit Report Errors: A quick review might reveal mistakes dragging your score down.

5. Show Additional Assets: Proving you have savings or investments can work in your favor.

Should You Wait or Apply Now?

While it’s possible to get a mortgage with a 500 credit mortgage score, you’ll get better terms if you wait and work on your credit. Even raising your score to 580 or 620 could open more doors, lower your interest rate, and reduce your monthly payment.

However, if waiting isn’t an option due to rising rent or personal reasons, FHA loans and subprime lenders are still viable solutions.

Final Thoughts

Yes, you can get a mortgage loan with a 500 credit score in 2025—but it requires research, preparation, and the right lender. Focus on mortgage lenders 500 credit score friendly, understand the trade-offs, and weigh your financial situation carefully. Whether you decide to move forward now or take some time to improve your credit, the path to homeownership is still open to you.

Also Read : How to Build Credit from Scratch and Reach a 100-Point Increase