Yes, you can refinance a mortgage with bad credit. Several programs exist specifically for borrowers with lower credit scores — and some don’t even check your score.
Quick Answer: Refinance Options by Credit Score
| Credit Score Range | Available Programs | Typical Rate Impact |
|---|---|---|
| 740+ | All programs — best rates | Lowest rates available |
| 700-739 | All programs | +0.25-0.5% vs. top tier |
| 660-699 | Conventional, FHA, VA, USDA | +0.5-1% vs. top tier |
| 620-659 | Conventional (minimum), FHA, VA, USDA | +1-1.75% vs. top tier |
| 580-619 | FHA rate-and-term, VA, FHA Streamline | +1.5-2.5% vs. top tier |
| Below 580 | FHA Streamline, VA IRRRL | Limited options; highest rates |
Refinance Programs for Bad Credit
FHA Streamline Refinance
| Feature | Details |
|---|---|
| Minimum credit score | None required (lender overlays may apply; some require 580+) |
| Current loan requirement | Must already have an FHA loan |
| Appraisal required | No |
| Income verification | No |
| Net tangible benefit | Must lower your monthly payment or switch from ARM to fixed |
| Mortgage insurance | Required (upfront 1.75% + annual 0.55%) |
| Wait time | 210 days from closing + 6 payments made |
Best for: Current FHA borrowers who want a lower rate with minimal paperwork and no credit score requirement.
VA IRRRL (Interest Rate Reduction Refinance Loan)
| Feature | Details |
|---|---|
| Minimum credit score | None required (lender overlays vary; some require 580-620) |
| Current loan requirement | Must already have a VA loan |
| Appraisal required | No |
| Income verification | No |
| VA funding fee | 0.5% (can be rolled into loan) |
| Net tangible benefit | Must lower rate by at least 0.5% or switch ARM to fixed |
Best for: Veterans and service members with current VA loans who want a rate cut regardless of credit score.
FHA Rate-and-Term Refinance
| Feature | Details |
|---|---|
| Minimum credit score | 580 (some lenders require 620+) |
| Can refinance from | Any loan type (conventional, USDA, or non-FHA) |
| Appraisal required | Yes |
| Income verification | Yes |
| LTV limit | Up to 97.75% |
| Mortgage insurance | Required (upfront 1.75% + annual 0.55%) |
Best for: Borrowers with 580+ scores who have a conventional or other loan type and want to switch to FHA.
Conventional Refinance
| Feature | Details |
|---|---|
| Minimum credit score | 620 |
| LTV limit | Up to 97% (rate-and-term); 80% (cash-out) |
| PMI | Required if LTV > 80%; cancellable at 78% |
| Income verification | Yes |
| Appraisal | Yes |
| Best rates | 740+ credit score |
Best for: Borrowers with 620+ credit who want to avoid permanent FHA mortgage insurance.
What Bad Credit Costs You
$300,000, 30-year fixed refinance comparison:
| Credit Score | Estimated Rate | Monthly Payment | Total Interest Paid |
|---|---|---|---|
| 760+ | 6.50% | $1,896 | $382,633 |
| 700-739 | 6.75% | $1,946 | $400,393 |
| 660-699 | 7.25% | $2,048 | $437,092 |
| 620-659 | 7.75% | $2,152 | $475,194 |
| 580-619 | 8.50% | $2,307 | $530,431 |
Rates are illustrative. A 580 score costs roughly $411 more per month and $148,000 more in total interest vs. a 760+ score.
Should You Refinance with Bad Credit?
When It Makes Sense
| Scenario | Why Refinance |
|---|---|
| Switching ARM to fixed rate | Lock in predictable payments before rate adjusts higher |
| Current rate is very high | Even with bad credit, today’s rate may be lower than your existing rate |
| Removing a co-borrower | Divorce or partner buyout requires refinance |
| FHA Streamline/VA IRRRL available | Minimal requirements; guaranteed savings if rate drops |
| Eliminating PMI | If you’ve reached 80% LTV but need to refinance to remove it |
When to Wait
| Scenario | Why Wait |
|---|---|
| Rate improvement is small | Closing costs (2-5% of loan) may take years to recoup |
| You’re about to improve your score | Wait 3-6 months to fix errors, pay down balances |
| You plan to move soon | Won’t recoup closing costs |
| Cash-out refinance with bad credit | Higher rates + higher balance = expensive |
How to Improve Your Odds of Approval
| Action | Timeline | Impact |
|---|---|---|
| Pay down credit card balances below 30% utilization | 1-2 months | +20-50 points |
| Dispute errors on credit report | 30-45 days | Variable — could be significant |
| Become an authorized user on old account | 1-2 months | +10-30 points |
| Avoid new credit applications | Immediate | Prevents score drops |
| Make all payments on time | 6+ months | Gradual improvement |
| Pay off collections (pay-for-delete if possible) | 1-3 months | Variable |
Break-Even Analysis
Before refinancing with bad credit (and a higher rate than ideal), calculate your break-even point:
| Closing Costs | Monthly Savings | Break-Even Point |
|---|---|---|
| $3,000 | $100/month | 30 months |
| $5,000 | $150/month | 33 months |
| $7,000 | $200/month | 35 months |
| $10,000 | $300/month | 33 months |
If you plan to stay in your home longer than the break-even point, refinancing makes financial sense.
The Bottom Line
You can refinance with bad credit — especially if you currently have an FHA or VA loan. FHA Streamline and VA IRRRL have no minimum credit score and require no appraisal or income verification. For conventional refinancing, you need at least a 620 score.
The real question is whether the math works: are your monthly savings large enough to justify closing costs, and will you stay long enough to break even?
Related: How to Refinance a Mortgage | What Credit Score Do You Need to Buy a House?