There is no single credit score that determines whether every borrower can refinance.
A score below 620 does not automatically make you ineligible, but it can limit what's available. Your options depend on your current mortgage, recent payment history, home equity, income, debt and the type of refinancing you want. Lenders can also set requirements that are stricter than the minimum rules for a loan program.
Refinancing With Bad Credit Basics
| Refinance Option |
Credit Considerations |
Key Requirement |
| Conventional refinance |
There is no single score minimum across every conventional underwriting path. Automated and manual requirements differ. |
Credit, LTV, DTI, payment history and the automated underwriting result can all affect eligibility. |
| FHA refinance |
Fully underwritten FHA financing can allow scores below 620. FHA Streamline refinances follow separate credit-qualification rules. |
Standard and streamline refinances have different underwriting requirements. |
| VA IRRRL |
VA does not set a minimum credit score, and an IRRRL generally does not require a credit underwriting package. |
You must be refinancing an existing VA loan and meet IRRRL requirements. |
| USDA Streamlined Assist |
The program focuses heavily on recent mortgage payment history rather than a universal published score threshold. |
The existing loan must meet payment-history, seasoning and payment-reduction requirements. |
| Non-QM or portfolio refinance |
Requirements are set by the lender or loan program rather than Fannie Mae, Freddie Mac or a government agency. |
Rates, fees, equity requirements and documentation can differ substantially by lender. |
Can You Refinance With Bad Credit?
You may be able to refinance with a low credit score, particularly if you have a strong mortgage payment history, sufficient equity or an existing government-backed loan that qualifies for a streamline refinance.
There is also no universal definition of “bad credit” for mortgage refinancing. A 620 score appears in some conventional manual-underwriting requirements, but it is not an industrywide cutoff.
For example, Fannie Mae does not set a minimum credit score for loans approved through Desktop Underwriter. Manually underwritten Fannie Mae mortgages generally require at least 620 for fixed-rate loans and 640 for adjustable-rate mortgages. Freddie Mac also uses different standards for automated and manually underwritten loans.
Individual lenders can apply stricter standards, commonly called lender overlays, even when the underlying loan program permits a lower score.
Minimum Credit Score to Refinance by Loan Type
The lowest credit score you can refinance with depends on the program and underwriting method. A number published by one program should not be treated as a universal mortgage-refinance minimum.
| Loan Type |
Agency or Program Baseline |
What to Know |
| Fannie Mae conventional |
No minimum score for Desktop Underwriter casefiles. Manual underwriting generally requires 620 for fixed-rate loans and 640 for ARMs. |
Automated approval still evaluates the full credit profile. Lenders can impose stricter requirements. |
| Freddie Mac conventional |
Loan Product Advisor relies on an Accept risk classification. Manual no-cash-out minimums vary by LTV and property type. |
A one-unit primary-residence manual refinance can have different requirements depending on LTV. |
| FHA |
For fully underwritten FHA loans, scores from 500 to 579 can be eligible with a maximum 90% LTV. A score of 580 or higher can qualify for maximum FHA financing. |
FHA Streamline refinances follow separate rules and can be non-credit qualifying. |
| VA |
VA does not set a minimum credit score. |
The lender may set its own score requirement. VA IRRRLs generally use streamlined underwriting. |
| USDA |
Requirements depend on the refinance option. Streamlined Assist emphasizes recent payment history and does not require a debt-ratio calculation. |
Lender requirements can still apply. |
If you are comparing score requirements, the type of refinance matters as much as the score itself. A standard rate-and-term refinance, cash-out refinance and streamline refinance can have very different underwriting rules. The requirements for what credit score you need to refinance also vary by property type and loan purpose.
Government-Backed Refinancing Options for Low Credit Scores
If you already have an FHA, VA or USDA mortgage, a streamline refinance may reduce some of the documentation or underwriting required for a new loan.
These programs are designed to refinance an existing loan within the same government-backed program. They are not general-purpose low-credit refinance programs for borrowers with other mortgage types.
FHA Streamline Refinance
An FHA Streamline Refinance is available for an existing FHA-insured mortgage. FHA offers both credit-qualifying and non-credit-qualifying streamline refinances.
For a non-credit-qualifying streamline, FHA does not require the lender to perform the same credit and capacity analysis used for a fully underwritten mortgage. FHA also does not require a new appraisal for a streamline refinance.
The existing FHA mortgage must be current, and the transaction must provide a net tangible benefit under FHA rules. An FHA Streamline is not a cash-out refinance.
VA Interest Rate Reduction Refinance Loan
A VA Interest Rate Reduction Refinance Loan, or IRRRL, is available to eligible borrowers refinancing an existing VA-backed mortgage.
VA generally does not require an appraisal or credit underwriting package for an IRRRL. Additional underwriting can apply in certain circumstances, such as when the existing mortgage is delinquent or the new payment increases substantially.
VA itself does not establish a minimum credit score, although a lender can impose one. An IRRRL also does not provide cash from your home equity.
USDA Streamlined Assist Refinance
USDA Streamlined Assist is available to eligible homeowners refinancing an existing USDA loan. The program does not require a debt-ratio calculation.
Current USDA guidance requires the existing loan to have closed at least 180 days before the agency receives the new conditional commitment request. The loan also must have been paid as agreed for the 180 days before application.
A new appraisal generally is not required, with an exception for certain USDA Direct Loan borrowers who received payment subsidy. The new principal, interest and monthly annual-fee payment must also be at least $50 lower than the current amount.
Non-Prime and Alternative Refinancing Options
Borrowers who do not qualify for an agency-backed or conventional refinance may find options through portfolio or non-QM lenders. These loans use underwriting rules set by the lender or investor rather than standard Fannie Mae, Freddie Mac, FHA, VA or USDA requirements.
Alternative underwriting can place more weight on home equity, assets, bank statements or other financial information. That does not mean approval is guaranteed. These loans can also carry higher rates, fees or equity requirements.
What Kinds of Lenders Refinance Bad Credit?
Banks, credit unions, independent mortgage lenders and portfolio lenders can all offer refinance loans. The relevant question is not simply whether a company is a bank, but which refinance programs it offers and what lender overlays it applies.
Government-backed refinancing requires a lender that participates in the applicable program. Non-QM and portfolio lenders may serve borrowers who fall outside agency guidelines, but their qualification standards vary significantly.
If your credit problems also affect a future purchase rather than a refinance, mortgage options for borrowers with bad credit follow a different set of qualification rules.
Using Home Equity When Credit Is Limited
Home equity is the difference between the value of your home and the amount you owe on loans secured by it. Equity can affect whether certain refinance or second-mortgage options are available.
A rate-and-term refinance changes the mortgage rate, term or both without primarily using the transaction to take equity out in cash. A cash-out refinance replaces your current mortgage with a larger loan and provides part of the difference in cash.
Cash-out refinancing generally requires sufficient equity and can have different credit standards from a no-cash-out refinance. The credit score requirements for a cash-out refinance therefore should be evaluated separately.
A home equity loan or HELOC lets you borrow against equity without replacing your existing first mortgage. These loans have their own credit, DTI and CLTV requirements. Getting a HELOC with bad credit may be possible when other parts of the application are strong, but qualification is lender-specific.
| Option |
Replaces Your First Mortgage? |
Credit and Equity Considerations |
| Rate-and-term refinance |
Yes |
Credit, payment history, DTI and LTV can affect eligibility and pricing. |
| Cash-out refinance |
Yes |
Requires usable equity and can have stricter underwriting than a no-cash-out refinance. |
| Home equity loan |
No |
Uses home equity as collateral and adds a separate monthly payment. |
| HELOC |
No |
Uses home equity as collateral and typically has a variable rate. |
Any loan secured by your home increases the consequences of missed payments. Using equity to repay unsecured debt also converts that debt into debt secured by your property.
Refinancing With Bad Credit vs. Good Credit
A stronger credit profile usually gives you access to more refinance options and can improve mortgage pricing. A lower score can narrow the programs available or result in higher rates or fees.
Credit score is still only one part of the application. Lenders may also evaluate your recent mortgage payment history, DTI, income, assets, property value and LTV. Automated underwriting systems can weigh those factors together rather than relying on one score cutoff.
This distinction is particularly important for conventional loans. A borrower can encounter a manual-underwriting score requirement in one situation while another application is evaluated through an automated system without the same fixed minimum.
When Refinancing With Bad Credit Makes Financial Sense
A refinance can reduce a payment, change the loan term or replace one type of mortgage with another. Whether it saves money depends on the new loan terms and the costs required to complete the transaction.
A simple break-even calculation divides your total refinance costs by the monthly savings produced by the new loan.
For example, suppose a hypothetical refinance costs $4,200 and reduces the monthly payment by $140. Dividing $4,200 by $140 gives a 30-month break-even period. If you sell, refinance again or pay off the mortgage before then, you may not recover those upfront costs through monthly savings.
A lower monthly payment also does not always mean a lower lifetime borrowing cost. Extending the repayment term can increase total interest paid even if the monthly payment falls.
Example: A Borrower With a Score Below 620
Suppose a homeowner has a 605 credit score and a current FHA mortgage with an acceptable payment history. A conventional refinance may be difficult depending on the underwriting path and lender requirements, but an FHA Streamline could remain an option if the borrower meets FHA's streamline rules.
The borrower would still need to compare the new rate, mortgage insurance, closing costs and required net tangible benefit. If the available refinance does not improve the loan enough to justify those costs, waiting while reducing debt and improving the credit profile could expand future options.
How to Refinance With Bad Credit
- Identify your current loan type. FHA, VA and USDA borrowers may have streamline options that are not available to conventional borrowers.
- Review your recent mortgage payment history. Streamline and low-credit refinance programs can place significant weight on whether the existing mortgage has been paid on time.
- Check your credit reports for errors and recent negative information. The score itself is only one part of the credit review.
- Estimate your home equity. Equity and LTV can affect conventional, cash-out and home-equity borrowing options.
- Calculate your DTI using your current monthly debts and qualifying income. Some streamline programs reduce or eliminate this calculation, but standard refinances generally evaluate repayment capacity.
- Compare more than the interest rate. Review closing costs, mortgage insurance, the new term, monthly payment and break-even period.
- Compare underwriting requirements across lenders. A lender overlay can be stricter than the underlying agency or investor guideline.
Bottom Line
Refinancing with bad credit is possible, but there is no universal minimum credit score that applies to every refinance. Your current loan type, underwriting method, payment history, equity, debts and lender requirements all affect which options are available.
Government streamline programs can be particularly relevant for eligible FHA, VA and USDA borrowers because they may reduce some of the credit, appraisal or income requirements found in a standard refinance.
Frequently Asked Questions
What Is the Lowest Credit Score to Refinance a Mortgage?
There is no single lowest score for every refinance. Fannie Mae does not require a minimum score for Desktop Underwriter casefiles, while manually underwritten conventional loans have specific minimums. FHA can permit fully underwritten loans below 620, and VA does not set its own minimum credit score.
Can You Refinance With Bad Credit?
Yes. A low score can reduce your options or increase borrowing costs, but it does not automatically prevent refinancing. Your mortgage type, recent payment history, equity, DTI and lender requirements can be as important as the score itself.
Can I Refinance My House With Bad Credit and No Equity?
It depends on the loan. FHA Streamline, VA IRRRL and USDA Streamlined Assist programs can reduce or eliminate standard appraisal requirements for eligible existing borrowers. A conventional or cash-out refinance generally depends more directly on current property value and LTV.
How Do I Qualify for Refinancing With Fair Credit?
Keep the mortgage current, limit new debt, review your credit reports, document qualifying income and determine your current home equity. A stronger payment history, lower DTI and lower LTV can improve the overall application even when your score is not especially high.
What Kinds of Lenders Refinance Borrowers With Bad Credit?
Banks, credit unions, mortgage companies, portfolio lenders and non-QM lenders may all offer refinance options for borrowers with weaker credit. Qualification depends on the program and the lender's own underwriting rules, so there is no single category of lender that guarantees approval.
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