Can I Still Use a Mortgage Broker If I Have Bad Credit?

Yes. A mortgage broker can send your application to several wholesale lenders (lenders that accept loans from brokers), so if one lender's minimum credit score is above yours, the broker can try another whose minimum is not. A broker cannot get you below a loan program's own floor: the Federal Housing Administration (FHA) will not insure a loan for a borrower whose score is under 500, and Fannie Mae requires at least 620 for a fixed-rate loan that a person underwrites (reviews and approves) instead of its automated system. A low score also raises the cost, through a larger FHA down payment below 580 or a higher upfront fee on a conventional loan.

Minimum credit scores and DTI limits by loan program

Your debt-to-income ratio (DTI) is your monthly debt payments, including the new housing payment, divided by your gross monthly income (how DTI is calculated). When a program lists two numbers, such as 31/43, the first caps your housing payment and the second caps all your debts. These are the program rules as of October 2026 (minimum credit score requirements covers scores in more detail).

Why lenders can require more than the program minimum

A lender requirement that is stricter than the program's rule is called an overlay. VA's own guidance, for example, says some lenders have a minimum score for VA loans. FHA's 500 and 580 thresholds are the lowest scores FHA will insure at each down payment level, and Fannie Mae's DU sets no score at all, but a lender can still set its own higher minimum. Because overlays are each lender's own policy, the lowest score accepted can differ from one lender to the next.

When a broker helps, and what it cannot change

The Consumer Financial Protection Bureau's (CFPB) home loan toolkit notes that applying with a higher credit score generally means more lenders to choose among. With a low score, fewer lenders will take your file, so a broker that can send it to several wholesale lenders is most useful when your score meets the program's floor but falls below some lenders' overlays. How brokers choose among their lenders explains how a broker matches your file to one, and the CFPB says it is illegal for a lender to pay a loan officer more to steer you into a higher-cost loan.

Shopping more lenders does not change three things:

1. Waiting periods after a bankruptcy or foreclosure. FHA generally requires two years after a Chapter 7 bankruptcy discharge (the kind that cancels most debts), 12 months of on-time payments plus court permission in a Chapter 13 repayment plan, and three years after a foreclosure. The lender can accept a shorter wait after a Chapter 7 (at least 12 months) or a foreclosure if you document circumstances beyond your control, such as a serious illness, and have handled credit responsibly since. On a manually underwritten USDA loan, a foreclosure or bankruptcy discharge in the 36 months before you apply triggers extra review.
2. DTI limits. No lender can approve ratios beyond the program limits and exceptions in the table, so sending the file to more lenders does not raise them.
3. Who decides. The lender's underwriter, not the broker, approves or declines the loan. Ask the broker how many of its lenders accept your score for the loan type you want, and which lender it plans to use. For FHA, VA, and USDA loans, that has to be a program-approved lender (which government-backed loans a broker can offer).

What a low credit score adds to the cost

On an FHA purchase, your score sets the minimum down payment, figured on the lower of the price or the appraised value. For a $300,000 home that appraises at the price, 3.5 percent down at a score of 580 is $10,500, and 10 percent down at 579 is $30,000, a $19,500 difference. FHA's mortgage insurance premiums do not change with your score: the upfront premium is 1.75 percent of the base loan amount (the loan before any financed premium), and the annual premium depends on the loan-to-value ratio (LTV, the loan divided by the home's value), the loan amount, and the term.

On a conventional loan, Fannie Mae charges the lender a one-time loan-level price adjustment (LLPA) based on credit score, LTV, and other loan features. The Federal Housing Finance Agency (FHFA) says lenders typically pass this kind of upfront fee to the borrower as a slightly higher interest rate. Fannie Mae's LLPA Matrix dated September 30, 2026, sets this credit score fee for a purchase loan with a term over 15 years and an LTV from 75.01 to 80 percent, such as a $300,000 loan with 20 percent down:

These fees add to any other LLPAs for features such as a condo or a second home. Fannie Mae waives all LLPAs for HomeReady loans (its program for lower-income borrowers) and for first-time buyers with income at or below 100 percent of area median income, or 120 percent in high-cost areas, so ask the broker whether you qualify. If your score is just below the next band, ask the broker to price the loan at both scores before you decide whether to apply now or rebuild your credit first.

Steps to take before a broker checks your credit

1. Get your credit reports from all three nationwide credit reporting companies at AnnualCreditReport.com and check them for errors. The CFPB's toolkit says to ask each company to fix any mistake, and that correcting errors could raise your scores in 30 days or less.
2. Pay down credit card balances where you can. The toolkit says about 35 percent of your credit scores is based on paying bills on time and about 30 percent on how much you owe.
3. Tell the broker your approximate score, your monthly debt payments, and the dates of any bankruptcy or foreclosure before it pulls your credit, so it can rule out lenders whose overlays or waiting periods you do not meet.

To compare a broker's offer with banks and direct lenders, see how to choose the best lender for your mortgage; other routes for a low score are in how to get a mortgage with a bad credit score.