To obtain a mortgage with bad credit, first assess your credit score and report. If below 580, consider credit repair strategies like disputing inaccuracies, paying down credit utilization, and maintaining on-time payments. Save for a down payment (3-20% of the loan amount) and closing costs (2-5% of the loan). Explore loans with lenient credit requirements, such as FHA loans (minimum 580 score, 3.5% down), VA loans (no down payment for veterans), or subprime mortgages (higher rates for scores below 600). Compare lenders for competitive rates and terms, and consider mortgage insurance (PMI or MIP) if needed.

FHA loans are popular for borrowers with scores as low as 580, requiring only 3.5% down and lenient documentation. According to the Consumer Financial Protection Bureau (2022), 20% of U.S. consumers have credit scores below 600, making FHA loans critical for accessibility. Credit repair can improve approval chances; Experian data shows a 20-point score increase reduces mortgage denial rates by 15%. However, subprime loans often carry rates above 6%, averaging 7.5% in 2023 (Federal Reserve). Mortgage insurance costs add 0.5-1.5% to annual payments, but a 20% down payment eliminates PMI, saving $100-$300 monthly on a $300,000 loan (Bankrate, 2023). Lender competition ensures better terms, with 85% of borrowers securing mortgages below the median rate (Mortgage Bankers Association). Prioritizing credit repair and exploring government-backed programs balances affordability and accessibility.