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Contrary to popular belief, solutions exist for those with bad credit. Although most mortgage lenders claim that the lowest credit score they’ll serve is 620, certain options, such as the Federal Housing Administration, exist for those whose credit score has fallen to as low as 580. Suffice it to say, if your financial situation is such that you’ve decided refinancing your home is the next step, but you’re concerned about having blemished credit, you’re not out of luck.

However, there is a caveat to mention at this stage: In exchange for access to a refinanced mortgage on a low credit score, you’ll often find you have to pay a higher interest rate during this period. This makes it important to rely on a mortgage calculator to see if refinancing will actually help you achieve your goals.

Tips to Get the Best Low Credit Refinance

Use the following tips to get the best possible deal on your refinance negotiations, regardless of the blemishes that live on your credit history report:

Expect higher rates. This is just a fair common sense warning. According to, the national mortgage average is 4.21 percent, and that’s a rate that assumes a decent credit score. You may be able to refinance, but expect to pay a higher rate than average.

Make sure your property has equity. Due to the volatile nature of real estate, the majority of lenders are unwilling to agree to a refinance if your house is considered underwater. Even if this isn’t the case, they might not be comfortable agreeing to refinance a house with little equity, which makes the property “riskier.”

Seek government-insured loans. If your house doesn’t have enough equity for a private loan, there are still ways to get around that problem and still get the refinancing you’re looking for. Conventional mortgages may demand high equity, but government-backed loans don’t share the same criteria. This includes the aforementioned FHA loan, which comes insured by the Department of Housing and Urban Development.

Acquire a streamline refinance with an FHA loan. If you obtained an FHA loan to purchase the house in the first place, it is also possible to look into getting a streamline refinance with an FHA loan. This is a unique type of mortgage service that can only be utilized by those who already have an FHA loan to start with.

Applicants who would not normally qualify for a conventional loan are often the perfect candidates for this type of refinancing. They also often do not demand an appraisal, which eliminates the concern for needing equity, and also saves money in fees in the end. Similarly, it is not necessary to verify credit, income or employment.

Strengthen all other parts of your application. Where your credit history may fail, the rest of your application can outshine. In fact, it’s almost a necessity for a conventional loan; an application too questionable won’t be approved. If you have time to improve your credit history before applying for a mortgage refinancing, this is the best thing you can do.

If not, be sure to gather all of the necessary paperwork that proves stable employment receiving sufficient funds to cover the expenses of your new mortgage terms. To help solidify a sense of stability, it can help to include a letter from an employer informing the bank of an incoming raise. Regardless of which paperwork you are able to include in your application, the premise is the same: You need to properly package yourself and show yourself off in as excellent a light as possible. You might be surprised with the results you get, even with previously poor credit.

What Else Can I Do to Improve My Chances?

While there isn’t exactly a way to guarantee that you’ll succeed at any given refinance attempt, there are a few extra steps you can take to help improve the odds of being approved. For one, even those with low credit scores are capable of displaying evidence of good credit behavior. Actions can speak louder than numbers in this case, especially if the drop in score was due to temporary life problems that no longer affect you.