Refinancing with bad credit: what is realistic below 620, 660 and 700

“Bad credit” is three different situations to a mortgage lender: below 620, 620 to 660, and 660 to 700. Each opens a different set of doors.

Below 620

Conventional refinancing is generally unavailable. What remains: an FHA Streamline if you already have an FHA loan (no credit score requirement from FHA itself on a non-credit-qualifying streamline, though lenders often set a floor around 580), a VA IRRRL if you have a VA loan (no VA minimum; lender floors vary), and an FHA rate-and-term or cash-out refinance from a conventional loan into FHA at 580+ (500 with 10% equity on rate-and-term). Portfolio and non-QM lenders may go lower at high rates. A 30-day mortgage late in the past 12 months closes most of these doors regardless of score.

620 to 660

Conventional rate-and-term opens at 620, but pricing adjustments at this band are steep, and PMI (if you are above 80% LTV) is expensive; compare with FHA, which prices flat across scores. Fannie Mae’s RefiNow and Freddie Mac’s Refi Possible, for borrowers at or below 100% of area median income, require 620 and offer relaxed DTI and an appraisal credit. Cash-out conventional at this band is possible but costly.

660 to 700

Most conventional options are available at workable pricing; the gap to a 740 borrower is still noticeable (often a quarter to half a point in rate-equivalent cost). If you are dropping FHA mortgage insurance, the math usually works here even with a slightly higher rate.

What to fix first

Late payments: nothing matters more than 12 clean months on the mortgage; if you are behind, loss mitigation — not refinancing — is the tool.
Utilization: paying revolving balances below 30% (ideally 10%) can lift a score 20 to 50 points within a billing cycle.
Errors: dispute inaccuracies directly with the bureaus; a removed erroneous collection can move you across a threshold.
Rapid rescore: once you have paid down a balance, some lenders can request an updated score within days.

When waiting is the answer

If a refinance at your current score saves little after costs, and six months of clean payments and lower balances would move you up a band, the patient route usually wins. Refinancing twice costs two sets of closing costs.

Frequently asked questions

Can I refinance if I am behind on my mortgage?

Almost never. Lenders require a current loan with no recent lates. If you are behind, ask your servicer about a repayment plan, forbearance or modification — see our mortgage problems hub.

Will a refinance denial hurt my credit?

Only the hard inquiry, worth a few points. A denial itself is not reported.

Is a “no credit check” refinance real?

FHA Streamline and VA IRRRL can be done without credit qualifying in some cases, but the lender still pulls credit to check for mortgage lates. Advertised “no credit check” refinances from unfamiliar companies are a red flag.