To obtain a mortgage with bad credit, first review and dispute inaccuracies on your credit report. Next, improve your score by paying bills on time, reducing credit utilization, and avoiding new credit inquiries. Consider subprime lenders or government-backed loans like FHA mortgages, which accept lower credit scores. A larger down payment (e.g., 10-20%) or mortgage insurance can also help qualify.

Fannie Mae and Freddie Mac now allow loans for scores as low as 620, while FHA mortgages require a 580+ score. According to the Consumer Financial Protection Bureau (CFPB), 20% of U.S. consumers had credit scores below 580 in 2022, limiting conventional loan access. Subprime lenders offer fixed-rate mortgages starting at 620 scores, but interest rates average 10-12%, per LendingTree data. FHA loans require a 3.5% down payment and 0.5-1.5% mortgage insurance, reducing monthly costs. Credit score improvements of 50+ points can qualify for better rates, as shown by Fannie Mae’s 2022 approval rates for scores below 700 (45% approved vs. 60% for scores 700+). Credit counseling agencies, cited by the CFPB, resolve 15-30% of disputed inaccuracies, enhancing eligibility. Combining these strategies increases mortgage approval chances despite poor credit.