Bad credit does not mean no mortgage in San Antonio. FHA accepts 580 with 3.5% down. Scores as low as 500 qualify for FHA at 10% down. VA loans serve Veterans at $0 down with no VA-set minimum score. The City of San Antonio HIP program offers up to $30,000 in DPA when funded, though it is paused for FY 2026. If renewed by City Council, it may reopen October 2026. TSAHC and SETH statewide programs remain active at 620+ scores. The question is not whether a loan exists for your credit level. It is which program, which lender, and how quickly you can get there.
Bad credit home loans at a glance
Three things buyers ask first about bad credit loans
What is the lowest credit score to get a home loan in San Antonio?
Can I get a home loan with collections on my credit report?
How much more does bad credit cost on a mortgage?
FHA loans: the workhorse for bad credit buyers in San Antonio
FHA is the loan product that puts more low-credit Americans into homes than any other program. At 580, the down payment is 3.5%, which is $10,150 on the $290,000 SA metro median. At 500 to 579, FHA still works but requires 10% down, which is $29,000 on the same home. The program accepts collections, charge-offs, and prior credit events as long as the score meets the threshold and the automated underwriting system approves the file. Employment history of 2 years, documented income, and DTI at or below 43% complete the picture.
The non-obvious issue is the difference between FHA at 580 and FHA at 620. The loan program is the same, but at 620 the buyer unlocks TSAHC and SETH down payment assistance, which can cover the entire $10,150 down. At 580, no statewide DPA is currently available. The City HIP program covers the gap when funded, but it is paused for FY 2026. This means a buyer at 580 without cash reserves may need 3 to 6 months of credit work to reach 620 before they can close, even though FHA technically approves them at 580. For the full FHA breakdown, see our FHA 580 guide.
- 580+ with 3.5% down: The standard bad-credit path. $10,150 on $290K. DPA covers when funded or at 620+.
- 500-579 with 10% down: $29,000 on $290K. Fewer lenders offer this tier. Manual underwriting may be required.
- MIP for life: 0.55% annually = $128/mo on the median. Cannot be removed with less than 10% down. Refinance to conventional at 680 to eliminate.
- FHA appraisal requirements: FHA appraisals check property condition, not just value. Peeling paint, missing handrails, and non-functional systems must be repaired before closing.
VA loans: $0 down and no PMI at any credit level
The VA home loan is the strongest mortgage product in the market. Zero down payment, zero private mortgage insurance, and no minimum credit score set by the VA. For eligible Veterans, active-duty Service Members, and surviving spouses near Joint Base San Antonio, this is the first program to explore regardless of credit score. BAH at E-5 with dependents is $1,869 per month in 2026, which covers the full VA mortgage payment on a home up to approximately $295,000 in the San Antonio market.
The non-obvious issue is that most buyers are turned away by the first lender’s overlay and assume they are disqualified from VA entirely. The VA itself has no minimum. The 620 requirement is the individual lender’s policy. A Veteran at 590 denied by Lender A may be approved by Lender B with a 580 overlay. Shopping 3 or more VA lenders is not optional at lower credit scores. It is the strategy. Additionally, some VA lenders will manually underwrite files that fail automated underwriting, which opens the door for borrowers with compensating factors like strong reserves or low DTI. For the full VA bad-credit path, see our VA bad credit guide.
- $0 down: No down payment at any credit level the lender accepts. The single largest advantage of VA.
- No PMI: No private mortgage insurance. Ever. Saves $128 to $200 per month compared to FHA.
- VA funding fee: 2.15% first use, 3.3% subsequent. Waived entirely for disabled Veterans. Can be financed into the loan.
- Shop lenders: At least 3 VA lenders if your score is below 620. Overlays range from 580 to 640 depending on the lender.
USDA and conventional: options at higher credit scores
USDA offers $0 down payment in USDA-eligible areas of outer Bexar County, including parts of Atascosa, Medina, and Wilson counties. The trade-off is a geographic restriction: the property must be in a designated rural area. Most of central and suburban San Antonio does not qualify. The typical credit requirement is 640, though manual underwriting may allow 620 with compensating factors. Conventional loans at 620 require 5% down but offer removable PMI at 20% equity, which is the long-term advantage over FHA.
The non-obvious issue is the USDA income cap. Unlike FHA and VA, USDA has strict household income limits, typically 115% of area median income. For Bexar County, this is roughly $103,000 for a 1-4 person household. A dual-income household earning $110,000 may not qualify for USDA even if they find an eligible property. Conventional at 620 has no income cap and no geographic restriction, making it the more flexible option for buyers who can reach that score threshold. TSAHC and SETH DPA both work with conventional loans at 620, covering most of the 5% down requirement.
| Loan Type | Min Score | Down Payment | Mortgage Insurance | DPA Compatible |
|---|---|---|---|---|
| FHA | 580 (3.5%) / 500 (10%) | 3.5% to 10% | 0.55% for life | City HIP, TSAHC at 620 |
| VA | No VA min (620 overlay) | $0 | None | TSAHC for closing costs |
| USDA | 640 typical | $0 | 0.35% annually | Limited compatibility |
| Conventional | 620 | 3% to 5% | PMI, drops at 20% | TSAHC, SETH, My First TX |
- USDA sweet spot: Buyers in Converse, Schertz fringe, or Seguin-adjacent areas earning under $103,000 household. $0 down with lower insurance than FHA.
- Conventional at 620: 5% down with PMI that drops at 20% equity. TSAHC covers most of the down. The best long-term cost structure above 620.
- Portfolio/non-QM: Some credit unions and portfolio lenders offer products below 580. Rates are 2% to 4% higher than FHA. These are genuinely a last resort, not a first option.
Down payment assistance that covers the cash barrier
The down payment is the barrier that stops more San Antonio buyers than credit score. A buyer at 580 who qualifies for FHA but has $2,000 in savings cannot close on a $290,000 home requiring $10,150 down. DPA programs exist to bridge this gap. At 620, TSAHC provides up to 5% of the loan as a grant. SETH provides similar DPA. My First Texas Home offers below-market rates plus DPA for first-time buyers. The City HIP program provides up to $30,000 at 0% interest, forgivable over 5 to 10 years, but is paused for FY 2026. If renewed by City Council, it may reopen October 2026.
The non-obvious issue is the 580-to-620 DPA gap. At 580, no statewide DPA is currently available. The buyer must come up with the cash or wait for City HIP to reopen. At 620, the full DPA menu opens. This gap means the 3 to 6 month credit path from 580 to 620 is not just about a better rate. It is the difference between being able to close and not being able to close for a buyer with limited savings. For the full program breakdown with income limits and application status, see our DPA guide.
- TSAHC Home Sweet TX: Up to 5% of loan as grant. 620+ score. Active now. No first-time requirement on some programs.
- SETH 5-Star: Up to 5% DPA. 620+ score. Active now. Works with FHA and conventional.
- City HIP 80: Up to $30,000 at 0% interest, forgivable. Paused FY 2026. If renewed by City Council, may reopen October 2026.
- Seller concessions: FHA allows seller-paid closing costs up to 6% of purchase price. In the current market, sellers are often willing to contribute.
What bad credit home loan lenders evaluate beyond the score
The credit score opens the door. The underwriter reads the full file. FHA’s automated system evaluates recent payment history patterns, the number and recency of collections, charge-off timing, bankruptcy seasoning, DTI ratio, and employment stability. A buyer at 585 with 12 months of perfect payments passes the system. A buyer at 595 with a mortgage late payment 4 months ago may get a Refer, meaning manual underwriting is required. Manual underwriting is available but not all lenders offer it.
The non-obvious issue is the compensating factors that can override marginal numbers. A buyer at 582 with a 44% DTI, which is above the standard 43% limit, may still get an Approve if they have 3 months of reserves, a housing payment history showing consistent on-time rent, and no derogatory marks in the last 12 months. The automated system weighs the full picture, not just the score and DTI in isolation. This is why a lender credit review, where someone reads the entire file and models the automated decision, matters more than a Credit Karma check. For the full breakdown of what underwriters evaluate, see our FHA 580 guide.
- Payment history is king: 12 months of clean on-time payments is the most important factor after the score itself. One recent late can trigger manual underwriting.
- Collections composition: Medical under $500 excluded. Non-medical without payment plan adds 5% to DTI. Addressed collections weigh less than active ones.
- Reserves help: 2 to 3 months of mortgage payments in savings after closing is not required for FHA but strengthens any borderline file.
- Rental history: 12 months of on-time rent payments documented by a landlord letter or bank statements can be a compensating factor for borderline automated decisions.
What bad credit actually costs on a San Antonio mortgage
The cost of bad credit on a mortgage is real but quantifiable. On a $290,000 San Antonio home, the interest rate difference between a 580 and a 700 score is typically 0.5% to 1.0%, adding $75 to $150 per month. FHA MIP at 0.55% adds $128 per month for the life of the loan. Conventional PMI at 620 drops off at 20% equity. Over a 7-year hold period, the total extra cost of buying at 580 versus 700 is roughly $14,000 to $23,000 in higher payments plus MIP.
The non-obvious issue is the comparison to NOT buying. San Antonio average rent is approximately $1,689 per month. Twelve months of renting while improving credit from 580 to 700 costs $20,268 in rent with zero equity built. The homeowner at 580 builds roughly $6,000 to $8,000 in equity over the same period. Additionally, the FHA buyer can refinance to conventional once they reach 680 and 20% equity, eliminating MIP entirely. The refinance costs $3,000 to $6,000 in closing. The math almost always favors buying at the earliest qualifying score and refinancing later rather than renting indefinitely while chasing a better number. Use our affordability calculator to model your scenario.
| Scenario | Monthly Payment on $290K | 5-Year Total Cost | 5-Year Equity Built |
|---|---|---|---|
| FHA at 580 (6.75%) | ~$2,650 | ~$159,000 | ~$30,000 |
| FHA at 620 (6.25%) | ~$2,550 | ~$153,000 | ~$32,000 |
| Conv at 680 (5.75%) | ~$2,350 | ~$141,000 | ~$36,000 |
| Renting (wait for better score) | ~$1,689 | ~$101,000 | $0 |
Predatory lending traps for bad credit buyers in San Antonio
Low-credit buyers are targeted by predatory operations because they feel locked out of traditional lending. The most common trap in San Antonio is the lease-option marketed as “rent to own” with $8,700 to $14,500 in non-refundable option fees plus $250 per month in above-market rent premiums. If the buyer cannot qualify at the end of the lease term, the option fee and all premium rent are forfeited. The second most common is the credit repair company charging $500 to $2,000 to file disputes the buyer can file for free.
The non-obvious issue is the “guaranteed approval” advertisement. No legitimate lender guarantees approval before reviewing income, credit, and assets. Ads claiming “bad credit? No problem! Guaranteed home loan!” are either non-QM products at 9% to 12% rates, lease-option schemes disguised as purchases, or outright scams collecting application fees. A legitimate FHA lender will review your file for free, tell you whether you qualify today, and map the specific path if you do not. There is no fee for being told the truth about your situation. For the rent-to-own comparison with real numbers, use our rent-to-own vs buying calculator.
- Rent-to-own risk: $8,700+ in non-refundable fees on a $290K home. If you cannot close, you lose everything. Credit repair + FHA is cheaper and safer.
- Credit repair companies: Charge $500-$2,000 for disputes you can file free. A lender credit review maps the mortgage path at no cost.
- “Guaranteed approval” ads: No legitimate lender guarantees before reviewing your file. These are typically non-QM at 9%+ or lease-option schemes.
- Hard-money residential: Short-term, high-rate loans meant for investors, not homebuyers. 10% to 15% rates with balloon payments. Never appropriate for a primary residence.
A bad credit home loan exists for almost every San Antonio buyer
FHA at 580. VA at $0 down. USDA in eligible outer Bexar areas. Conventional at 620 with removable PMI. DPA grants at 620 that cover the down payment. The lending infrastructure for low-credit buyers in San Antonio is broad, and most of it is government-backed. The starting point is knowing your real FICO score from a lender, not from Credit Karma, and having that lender map which programs accept your current file. If the answer is “not yet,” the follow-up is “what specific changes, and how many months to get there.”
The non-obvious advantage is that the free credit review with a lender is the single most valuable 15 minutes in the homebuying process. It eliminates guessing. It tells you whether you qualify today, what changes would qualify you if not, and the timeline for each threshold. Buyers who start with the review buy faster because they stop chasing wrong targets. A buyer who thinks they need 700 but actually qualifies at 580 loses months of equity building. A buyer at 520 who thinks they need to wait years but actually needs 4 months of utilization paydown starts the clock sooner.
