To secure a mortgage with a poor credit score, first address credit inaccuracies by disputing errors on your credit report. Pay down revolving debt to reduce credit utilization, which typically should be below 30%. Consider loans requiring smaller down payments, such as FHA loans (3.5% down for scores ≥580) or VA loans (no down payment for eligible veterans). Prioritize lenders offering non-traditional credit scoring models that consider payment history beyond credit bureaus. Save for a larger down payment (20% or more) to qualify for conforming loans or avoid private mortgage insurance (PMI).

Poor credit scores (below 600) significantly increase mortgage costs and reduce approval chances. For example, FHA loans require a 10% down payment for scores 500–599, while conventional loans often deny applications below 620. According to the Consumer Financial Protection Bureau (2022), mortgages for scores below 600 had average interest rates 1.5–2.0% higher than those for scores 720+. Fannie Mae data shows 56% of applicants with scores 500–599 face loan denials, compared to 12% for scores 680+. Improving credit scores by 50 points can lower rates by 0.5–1.0% and reduce monthly payments. Non-traditional lenders may approve loans with scores 300–600 if supported by stable income and assets. However, higher down payments (15–20%) are often required to offset risk. Ultimately, combining credit repair, strategic loan selection, and financial reserves maximizes approval odds while minimizing costs.