RANKING & REVIEWS
BEST SUBPRIME MORTGAGE LENDERS FOR BAD CREDIT
Finding Mortgages for Bad Credit | Top 5 Subprime Mortgage Lenders for Bad Credit Mortgage Loans
Before gaining an in-depth understanding of the options available to you to obtain a mortgage with bad credit and to learn about the top subprime mortgage lenders, it’s first important to understand the requirements of a conventional mortgage.
In today’s marketplace, the minimum requirements for obtaining a conventional mortgage are relatively rigorous. For borrowers who want the most favorable interest rates on a mortgage, it’s advisable to maintain at least a credit score of 720.
Also important in deciding whether or not a consumer qualifies for a mortgage is an individual’s debt-to-income ratio. Lenders will consider the total monthly debt of the loan applicant as compared to his/her income.
Banks and lenders will typically require the applicant’s debt be no more than 36% of his/her gross monthly income.
So if you don’t meet these standards as a first-time homebuyer with bad credit, does that mean you won’t be able to buy a home?
Not necessarily.
Award Emblem: Top 5 Subprime Mortgage Lenders
There are options to obtain mortgages for bad credit from bad credit mortgage lenders.
Called subprime mortgages, these poor credit home loans are designed to offer homeownership opportunities to consumers whose credit score may not meet the minimum standard of a traditional lender or who might have a higher debt-to-income ratio.
It’s not uncommon for subprime mortgage lenders to offer these options, and, according to the Equifax National Consumer Credit Trends Report, first-mortgage originations for subprime borrowers with an Equifax Risk Score of 620 or less have grown.
From January to October 2015, bad credit mortgage loan originations rose 28%.
The following subprime mortgage lenders list highlights some of the best options to obtain a mortgage for a bad credit first-time buyer or a bad credit mortgage in general.
In addition to subprime mortgage lenders and direct poor credit mortgage lenders, this list also includes some names, such as Home Loans For All, which are not direct bad credit mortgage lenders but instead serve as a portal to connect borrowers to possible lenders.
AdvisoryHQ’s List of the Top 5 Best Subprime Mortgage Lenders
List is sorted alphabetically (click any of the lender names below to go directly to the detailed review for that bad credit mortgage lender).
Top 5 Best Bad Credit Mortgage Lenders | Brief Comparison & Ranking
Bad Credit Mortgage Lenders | Type of Coverage |
| Carrington Mortgage Services | Direct Lending and Mortgage Servicing |
| Home Loans For All | Find And Compare Mortgage Lenders |
| LoanLeaders | Direct Mortgage Lender |
| Sebonic Financial | Direct Mortgage Lender |
| The Lenders Network | Find And Compare Mortgage Lenders |
Table: Top 5 Best Subprime Mortgage Lenders | Above list is sorted alphabetically
What Is a Subprime Mortgage
Before focusing on the best subprime mortgage lenders that offer bad credit mortgage loans, having a general concept of what a subprime mortgage is and how it differs from a conventional mortgage is important.
A subprime mortgage is offered by poor credit mortgage lenders, which often indicates it’s designed for borrowers with a score of less than 600, often a first-time homebuyer with bad credit.
These borrowers would be unlikely to qualify for a traditional mortgage, but since they are considered risky to the lender, subprime mortgage lenders will charge a higher interest rate.
This is where the name “subprime” comes from because interest rates are above what’s considered a prime lending rate.
Interest rates offered on a bad credit mortgage can vary significantly and may be based on any number of factors that indicate the level of risk to the lender.
These factors may include not just credit score but also the size of the down payment the borrower can provide, the late payments on his/her credit report, and the types of delinquent payments under the individual.
How Do Low Credit or Subprime Mortgages Work?
The process of obtaining mortgages for bad credit from subprime mortgage lenders is relatively similar to what you go through for a conventional mortgage. The primary difference is simply the interest rate the borrower will be charged.
Prime mortgage interest rates are those rates that are offered to customers that have excellent credit histories. Prime mortgages can be fixed or adjustable rate.
Image Source: Top Subprime Mortgage Lenders
On the other hand, when working with poor credit mortgage lenders, consumers will often be required to get an adjustable-rate mortgage.
Not only will the adjustable-rate subprime mortgage have a higher interest rate at the time it’s given, but that interest rate can also rise over time.
Before taking out a subprime mortgage, consumers should realize they may have other options.
For example, some lenders may offer better terms than poor credit mortgage lenders, and there may also be government-backed options that could make homebuying an option for people with bad credit, including the FHA loan.
Before searching for subprime mortgage lenders, borrowers should explore all possible options to make sure they’re making the right decision.
The Pros & Cons of a Subprime Mortgage
As with most loan products, there are upsides and downsides to a subprime mortgage. The primary advantage of working with bad credit mortgage lenders is that there are opportunities for homeownership that wouldn’t ordinarily exist.
These borrowers then get the benefits that come with owning a home, which can help them improve their lifestyle and even strengthen their finances.
Homeownership helps people build equity which is key to building wealth.
At the same time, bad credit mortgage loans are expensive. In addition to having higher interest rates, they often include a range of penalties including for prepayment.
Also, if a borrower takes out an adjustable-rate mortgage, his/her monthly payment can increase significantly after the introductory period. It may be difficult for borrowers to make the payment, leading to foreclosure.
The most important thing a consumer can do when considering mortgage loans for bad credit is to research and understand the complexities of a loan.
Borrowers should also make sure they’re working with only reputable subprime mortgage lenders so that there aren’t hidden details, fees, or penalties that they aren’t aware of at the time of loan origination.
See Also: Best Refinance Companies to Refinance with | Ranking | Top Mortgage Refinance Lenders
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Detailed Review – Top Ranking Best Poor Credit Mortgage Lenders
Below, please find a detailed review of each lender on our list of best poor credit mortgage lenders. We have highlighted some of the factors that allowed these subprime mortgage lenders to score so highly in our selection ranking.
Carrington Mortgage Services Review
Carrington Mortgage Services is a mortgage company offering lending and mortgage services that has processed more than $10 billion in mortgages.
Carrington also has an affiliated real estate brokerage company, and it works to help customers find the right loan products and terms and also walk them through the entire process.
The values of Carrington are based on integrity, transparency, and equity, and the mortgage professionals making up the Carrington team are licensed by federal and state authorities.
Key Factors That Enabled This to Rank as One of the Top Subprime Mortgage Lenders
Reasons Carrington is included on this list of the leading bad credit mortgage lenders offering poor credit home loans are cited below.
USDA Loan Program
For poor credit borrowers, opening a USDA loan through Carrington can be a great solution for poor credit home loans.
These loans are used to help low-income individuals or households purchase or refinance a home that is located in a rural area. Features of the USDA loan program include:
- No downpayment requirement for qualified borrowers
- Funds can be used to build, repair, renovate, or relocate a home
- Minimum 550 credit score
If you currently have a loan serviced by Carrington Mortgage services, a USDA loan becomes even more accessible, as the minimum credit requirement drops down to 500.
The USDA loan program is available in over 30 states across the country, making it a great option for bad credit borrowers.
MyLoanDetail
Once approved for a Carrington loan, bad credit borrowers have access to MyLoanDetail™, the company’s proprietary online loan review resource.
This borrower-friendly education tool is meant to provide a thorough understanding of borrower obligations underneath the mortgage application and contract. MyLoanDetail provides a detailed explanation of:
- Terms & responsibilities
- Loan rate & cost
- Monthly payments
- Insurance payments (if applicable)
What truly makes this mortgage tool stand out is that MyLoanDetail also provides answers to common borrower questions, like what happens with missed or late payments, and covers key mortgage concepts and terminology.
Ray Brousseau, Executive Vice President of the Mortgage Lending Division, explains the importance of borrower education:
“Extending credit to clients in the underserved market requires a heightened sense of dual responsibility–and that begins with more effective borrower education through resources such as MyLoanDetail™.”
Most borrowers do not have the opportunity to learn about how a mortgage works, particularly first-time home buyers, and Carrington effectively fills that education gap with MyLoanDetail.
Down Payment Assistance Programs
Along with looking for poor credit home loans, many borrowers may also be concerned about down payment requirements as a condition or potential barrier to homeownership.
Carrington is an excellent choice, in terms of bad credit mortgage lenders, because it also offers services related to down payment assistance programs.
Carrington offers its Down Payment Assistance (DPA) programs to help homebuyers fund not only the down payment they’ll need to purchase a home, but also the closing costs they may be required to pay. These programs are conducted in affiliation with state housing authorities.
Carrington has 53 approved DPA programs in 13 states, including California, Florida, Pennsylvania, and Georgia.
FHA Loans
One of the ways Carrington excels as a leader among bad credit mortgage lenders is through its availability of the FHA loan.
As mentioned at the start of this subprime mortgage lenders list, an FHA loan may be a valuable option for bad credit borrowers who don’t want to deal with the negative aspects associated with most bad credit mortgage loans.
The Federal Housing Administration provides loan programs that are specifically designed to make it easier to get a home loan, even with limited or bad credit, or a small down payment.
These loans, which are offered through Carrington, are for borrowers who might not otherwise qualify for a home loan, and the underwriting guidelines are more flexible than conventional mortgages.
Conventional Loans
Carrington does also offer conventional loans from Fannie Mae and Freddie Mac which serve a range of borrowers, stretching from great to less-than-perfect credit.
For bad credit borrowers who are on the higher end of the spectrum, a conventional loan through Carrington could be a great way to obtain mortgages for bad credit.
Licensed Loan Officers
The process of applying for mortgages for bad credit can be even more overwhelming than the process for a conventional mortgage.
That makes it important to work with qualified professionals who understand your needs and can provide honesty and transparency while offering the utmost of expertise.
All Carrington loan officers are the state and SAFE Act-licensed and registered.
All personnel is required to meet state and federal licensing requirements, so Carrington is always leading the way regarding federal and state changes that impact lenders and how they do business.
Carrington adapts quickly to regulatory changes and is always 100% compliant. It also emphasizes its dedication to protecting consumers and reducing fraud in the industry while remaining completely transparent.
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Home Loans For All Review
Home Loans For All isn’t a direct lender but instead serves as a resource for consumers who are searching for mortgages for bad credit or subprime mortgage lenders that will work for them.
Home Loans For All provides a simplified and streamlined way to compare a variety of loan and refinancing options with bad credit and offers a variety of tools that can help buyers as well.
Home Loans For All has a team of mortgage experts who are trained in helping consumers connect with bad credit mortgage lenders and in finding the most valuable poor credit home loans.
Key Factors That Led Us to Rank This as One of 2017’s Best Sources for Poor Credit Mortgage Lenders
Home Loans For All was included on this list of subprime mortgage lenders and resources for mortgages for bad credit for the following reasons.
Diverse Options
Regardless of whether or not you’re searching specifically for bad credit mortgage loans or conventional home loans, it’s important to feel like you have plenty of options and the opportunity to compare products.
This helps you find the product that fits your needs and offers the most favorable terms.
Home Loans For All isn’t a direct provider of mortgages for bad credit but instead lets borrowers compare home loan offers from multiple poor credit mortgage lenders in a matter of minutes.
Users are matched with the extensive network of poor credit mortgage lenders, and they can receive approval in just a few minutes.
Credit Resources
Home Loans For All is unique because, in addition to providing a convenient way to access subprime mortgage lenders and receive offers quickly, this site also serves as a one-stop-shop for all of your finance needs.
It provides guides to credit repair which can help consumers make the necessary changes to qualify for a conventional loan instead of only poor credit home loans.
Home Loans For All will offer free, no-obligation credit consultations to clients, and these consultations include a free credit summary. The expert credit professionals can then help clients find the best solutions to their credit issues.
FHA 203(k) Loan
By visiting Home Loans For All, consumers can gain access to information and lenders who are authorized to offer the FHA 203(k) loan, which is designed to fund construction projects that would improve an existing property.
There are two versions of this FHA loan, which are the standard 203(k) and the streamline 203(k).
The FHA acts as an insurer for home loan lenders who offer the loan.
The streamline 203(k) requires fewer documentation demands than the standard 203(k), although the streamlined version of the loan has a maximum amount of $35,000 while the standard does not.
Tools
As mentioned, Home Loans For All is not just a resource to connect with poor credit mortgage lenders. It’s also an excellent resource for anyone who wants to understand the basics of credit and their options when it comes to buying a home.
As part of that, it features tools, including a home loan affordability calculator, a mortgage calculator, and guides to mortgage negotiation.
Also available are free credit checks and direct access to HUD homes.
Additionally, if a Home Loans For All consumer can’t get his/her loan approved, the company can connect the individual with third-party mortgage loan preparation and credit repair services.
Related: Top Mortgage Lenders | Ranking | Reviews of the Best & Largest Mortgage Lenders
LoanLeaders Review
LoanLeaders is a direct lender of a variety of mortgage products, including bad credit mortgage loans. The company offers expertise in many loan products, including FHA loans, VA loans, conforming loans, and specialized niche products.
It also specializes in working with borrowers who are looking for poor credit home loans or who have faced challenges in the past.
The goal of LoanLeaders is to provide consumers with a loan that’s going to be beneficial to them and bring them value while also being appropriate for their particular circumstances.
LoanLeaders is also unique on this subprime mortgage lenders list because it offers unique products that might not be offered by banks or credit unions.
Key Factors That Allowed This to Rank as One of 2017’s Best Subprime Mortgage Lenders
Key reasons LoanLeaders was included on this subprime mortgage lenders list are detailed below.
Trouble-Free Mortgage Loans
One way that LoanLeaders is unique is that it doesn’t just offer some options for borrowers seeking home loans for bad credit.
Instead, it focuses entirely on mortgages for bad credit. At the same time, LoanLeaders also focuses on providing what it calls “trouble-free mortgage loans.”
It works to simplify the entire process of finding and securing the loan that’s right for each individual client, and it offers quick turnaround times as well.
Once the mortgage consultation process is completed, the consumer will be offered options for several bad credit mortgage lenders and options they can review.
All advice is unbiased and objective, ensuring that the borrower is connected with only the very best poor credit home loans.
Fair Treatment
Oftentimes, consumers face problems when trying to find a bad credit mortgage or bad credit mortgage lenders due to unfair treatment, or because the loan officers try to push them toward a product that is too expensive, doesn’t meet their needs, or has hidden fees or downsides.
LoanLeaders strives to avoid any and all situations that could make a borrower feel like he/she is being treated unfairly.
Even for those borrowers seeking mortgage loans for bad credit, LoanLeaders delivers the same level of support and service to every customer. Its mortgage bankers are accessible, and LoanLeaders is an equal housing lender.
No Closing Cost Loans
LoanLeaders is an excellent option for borrowers seeking the best subprime mortgage lenders because it specializes in thousands of loan products, many of which are aimed at consumers with less-than-perfect financial situations.
One of the unique loan options offered is the No Closing Cost Loan. This program is typically associated with refinancing mortgage loans as opposed to mortgages for bad credit first-time buyers.
With the No Closing Cost Loan, existing homeowners can lower their monthly payments without closing costs, which often include underwriting and processing, title and escrow fees, country recording fees and more.
The closing costs are avoided by having the borrower pay a slightly higher interest rate, but he/she receives a rebate that pays the closing costs of the loan without upfront costs.
Government Loans
LoanLeaders features government-backed products that may be of interest to borrowers seeking mortgage loans for bad credit.
These include the FHA loan and the VA loan.
The federal government insures both, and they are easier to qualify for than conventional loans. With both, the borrower can finance more of the loan amount than he/she can with most traditional loans.
FHA loans are ideal for first-time buyers looking for bad credit home loans, and they also have low down payment requirements.
The VA loan lets borrowers finance 100% of the loan if they have proof of their veteran status.
Popular Article: Top Online Mortgage Lenders | Ranking & Reviews
Sebonic Financial Review
Transforming home lending into an enjoyable experience is what Sebonic Financial strives for.
Sebonic Financial is a startup that combines innovative ideas, rapid execution, and technology, yet it’s also backed by the resources of an established home loan lender.
Sebonic is part of Cardinal Finance Company, and as a trusted industry leader for nearly 30 years, they offer much more than bad credit home loans, including conventional loans, jumbo loans, USDA loans, and VA loans.
Key Factors That Enabled Us to Rank This as One of 2017’s Best Bad Credit Mortgage Lenders
Some of the factors that make Sebonic one of the best resources for home loans for bad credit are detailed in the following list.
Customer Service
One of the many reasons Sebonic is considered not only an excellent resource for borrowers seeking bad credit mortgage lenders but for mortgages, in general, is because of its reputation for providing excellent customer service.
If you read reviews left by actual customers of Sebonic, you’ll notice that they praise the company on its professionalism, knowledge, responsiveness, and overall level of service.
Many people find that Sebonic’s unique technology and focus on efficiency makes it a better option than a bank or credit union for those seeking mortgage loans for bad credit or any type of home loan product.
Collaboration and Customized Requirement Lists
Typically, whether you’re searching for poor credit mortgage lenders, mortgage loans for bad credit or even prime mortgages, it can be a challenging, complicated, and overwhelming experience.
Too often, lenders don’t keep borrowers updated on what’s happening in the lending process, so they feel left in the dark and unsure of what’s expected from them next.
The bad credit home loans professionals at Sebonic strive to be unique in the way that they handle this process.
Not only do they offer a collaborative experience where the borrower is kept ahead of everything happening in the loan process, but they also provide customized document lists that highlight everything the borrower needs to provide.
This can be particularly important for borrowers seeking mortgage loans for bad credit because they may require special documentation or information to process their loan.
Low-Cost Simplicity
If you’re working to obtain a mortgage with bad credit, it can already be a difficult process. Sebonic doesn’t want to add stress to an already intimidating experience. It wants to make it an experience that’s simple and pleasant.
As part of this, Sebonic offers the opportunity to take advantage of lower closing costs, payments, and overall fees throughout the life of a loan.
Additionally, simplicity is essential to all the products and services offered by Sebonic. Each step of the process is explained as are borrower requirements and responsibilities, all with a focus on transparency, expediency, and honesty.
Credentials
One of the primary reasons Sebonic was included on this subprime mortgage lenders list of the best options to obtain a bad credit mortgage is because of its government credentials.
Along with being an approved seller and servicer for Fannie Mae, Freddie Mac, and Ginnie Mae, Sebonic is a division of Cardinal Financial Company, which is also an approved lender for the Department of Housing and Urban Development.
Additionally, Cardinal/Sebonic is an approved FHA and VA lender, with a direct endorsement from the FHA, and it is designated as a VA automatic lender authority.
Cardinal is also an authorized lender for the government’s USDA/Rural Housing Program.
The availability of all of these diverse government-backed loan programs makes Sebonic and its parent company leaders among bad credit mortgage lenders.
Read More: Top Banks to Get a Mortgage from | Ranking of Best Banks for Home Loans
The Lenders Network Review
The Lenders Network is not a direct bad credit mortgage lender but is instead a resource where consumers searching for mortgages for bad credit can go to compare products and have companies come to them.
Users can compare multiple offers for bad credit home loans in a matter of minutes by completing a quick contact form.
The Lenders Network specializes in connecting borrowers with direct FHA lenders and FHA refinances, which is ideal if you’re searching for poor credit home loans or a mortgage with bad credit.
Key Factors That Enabled Us to Rank This as One of This Year’s Leading Tools to Find Bad Credit Mortgage Lenders
When considering the best resources to locate a bad credit mortgage or subprime mortgage lenders, the following are some reasons The Lenders Network was included in this ranking and review.
Specialization
While some of the names on this subprime mortgage lenders list offer bad credit mortgage options as part of a larger portfolio of loan products, The Lenders Network is unique because providing consumers with links to mortgages for bad credit is its exclusive area of expertise.
Borrowers don’t have to worry about sifting through loan products that won’t work for them because they will only be presented with mortgage loans for bad credit.
This saves borrowers a lot of time, and, while The Lenders Network isn’t one of the direct poor credit mortgage lenders on our list, it provides a streamlined way to source and get in touch with bad credit mortgage lenders.
Fast Response
Whether you’re searching for a mortgage for first-time home loans for bad credit, or just general bad credit mortgage loans, it’s important to have the option to compare the products available to you.
The Lenders Network makes this fast and easy. First, consumers fill out a brief questionnaire which is free and requires no obligation for the borrower.
Then, borrowers are referred to no more than three lenders who specialize in offering bad credit mortgage loans.
Borrowers can usually expect to receive a response within a few minutes, so they can start the process of finding the right mortgage loans for bad credit incredibly quickly and easily.
Private Information
In some circumstances, when a borrower submits private information to a site that specializes in connecting him/her with bad credit mortgage lenders, that company will then refer that information to a credit repair company.
The Lenders Network is unique because it guarantees never referring a customer to a credit repair company.
Instead, if the consumer is denied a loan from a member of The Lender Network’s group of bad credit mortgage lenders, his/her information is kept private, but the individual can download a free DIY credit repair guide.
In general, The Lender’s Network also doesn’t resell information for months, like many other companies do, so site users won’t receive calls and emails for months from lenders.
Informational Resources
The Lenders Network is a unique way for people to search for poor credit home loans and find a specially designed mortgage for a first-time homebuyer with bad credit because it also offers a variety of guides and informational resources.
Some of these guides focus on certain topics, such as VA Streamline Refinance Mortgage – The Ultimate Guide.
Other educational resources that might be of value to borrowers looking for mortgage loans for bad credit, available through The Lenders Network, include:
- What Credit Score Is Needed to Buy a House Using an FHA Loan
- Free DIY Credit Repair Guide
- FHA Guidelines on Closing Costs
- VA Home Loan Guidelines
- 10 Tips You Need to Know Before Refinancing Your Mortgage
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Conclusion – Top 5 Sources for Bad Credit Mortgage Loans and Bad Credit Mortgage Lenders
Before starting your search for subprime mortgage lenders and resources to find mortgage loans for bad credit, consumers should first be prepared and understand their options.
Individuals searching for a bad credit mortgage should look for companies and resources that are compassionate and have a thorough understanding of their situation.
Consumers should also research companies and resources thoroughly since subprime mortgage lenders have a reputation for unethical actions in the past, and these mortgages can unexpectedly become incredibly expensive if you don’t work with a reputable company.
For borrowers seeking bad credit mortgage lenders, our ranking and review represents a combination of indirect and direct poor credit mortgage lenders.
Whether these companies are offering bad credit home loans through FHA-backed loans or providing portals to connect borrowers to the best bad credit mortgage lenders, the above list provides excellent sources for prospective homeowners to obtain a mortgage with bad credit.
Related: Finding the Top Online Mortgage Lenders | What You Need to Know
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Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.
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