Business Insider's personal finance team compared Carrington Mortgage Services to the best mortgage lenders and found it to be an industry leader, particularly for borrowers with poor credit.
Carrington is one of the best bad credit mortgage lenders, thanks to its low minimum credit score requirements and willingness to work with those who have recent negative events on their credit reports. We especially like that borrowers can get an FHA or VA mortgage from Carrington with a score as low as 500. But this lender's rates and fees are on the high end.
Overview of Carrington Mortgage Services
About Carrington Mortgage
Carrington Mortgage Services is a direct mortgage lender that was founded in 2007. It's a subsidiary of Carrington Holding Company, LLC, which also owns wholesale and correspondent lending divisions.
Nationwide Lending
Carrington Mortgage Services is licensed to lend mortgages in 48 states. It doesn't lend in Massachusetts or North Dakota.
Carrington Mortgage Services Loan Options
Carrington offers the following types of home loans:
- Conforming loans
- FHA loans
- VA loans
- USDA loans
- Non-QM loans, including options for self-employed borrowers and those with poor credit. Loan amounts can go up to $3.5 million
Conforming loans
Conforming loans are the most popular type of mortgage. To qualify for a conforming loan from Carrington, you'll need a credit score of 620 and a maximum debt-to-income ratio of 43%. Conforming loans allow down payments as low as 3%.
Government-backed mortgages
Government-backed mortgages are insured or guaranteed by a government agency. FHA loans, VA loans, and USDA loans are types of government-backed mortgages.
Carrington allows FHA borrowers to have credit scores as low as 500. However, if you get an FHA loan with a score below 580, you'll need to put down 10%. If your credit is 580 or higher, you can put just 3.5% down. The maximum DTI is 43%.
The lender also allows scores down to 500 on its VA loans. With a VA loan, you won't be required to make a down payment. These loans are only available to veterans and military members who meet minimum service requirements.
You'll need a 550 credit score to qualify for a USDA loan with Carrington. This is relatively low, since many lenders require a 640 score for these loans. USDA loans require no down payment, but they're only available to borrowers in eligible rural or suburban areas who meet income limits.
Non-QM loans
Non-QM loans are a category of mortgages that serve borrowers who don't qualify for traditional mortgage options. This lender has a few different non-QM loan options, including:
- Flexible Advantage Loan: Accepts credit scores down to 550 and allows recent negative credit events (including bankruptcy, short sale, foreclosure, or late payments), with loan amounts up to $1.5 million
- Flexible Advantage Plus Loan: Can have a bankruptcy or foreclosure provided it's at least three years old, with a minimum credit score of 620. Loan amounts go up to $2 million
- Carrington Prime Advantage Loan: These loans require credit scores of 660 or higher, but they offer better rates compared to the Flexible Advantage Plus Loan. Recent negative credit events are allowed, and you can borrow up to $3.5 million
Self-employed borrowers can use bank statements to apply for these loans. Term lengths go up to 40 years, which is longer than the standard 30-year mortgage.
Non-QM loans are more expensive than traditional mortgages because they're more risky for lenders.
Carrington Mortgage Services Interest Rates and Fees
Based on our review of Home Mortgage Disclosure Act data, Carrington's mortgage rates are slightly higher than average. Because this lender offers non-QM loans, some borrowers may pay more to get a mortgage here. But you may still be able to get a competitive rate with this lender if you aren't getting a non-QM loan.
To get an idea of Carrington's current rates, you can use the lender's rate quote tool to get a customized estimate of your rate and fees. You'll just need to provide some basic information about your finances and the home you want to buy or refinance.
In 2023, the average borrower getting a conventional loan from this lender paid $6,306 in origination charges, according to HMDA data. This is high compared to other lenders.
Carrington Mortgage Services Overall Lender Rating
Loan Types: 4 out of 5
Carrington is a good lender if you're looking to get a non-QM loan, since it has multiple non-QM options that can help borrowers in a variety of different situations qualify for a mortgage. It also has conventional and government-backed loans.
Affordability: 3.5 out of 5
Borrowers with less-than-perfect credit might find Carrington to be an affordable lender, since it has options for recent credit events or low credit scores. If you're having trouble qualifying for a mortgage elsewhere, you might have some luck with this lender. But its rates and fees are a bit high compared to other lenders.
Customer Satisfaction: 4.93 out of 5
On its Zillow lender profile, Carrington has a 4.93 out of 5-star rating, based on over 900 customer reviews.
Trustworthiness: 3 out of 5
The Better Business Bureau gives Carrington an NR, or "no rating" because the lender is responding to previously closed complaints. The BBB looks at a company's responses to customer complaints, transparency about business practices, and honesty in advertising.
Carrington does have a recent public scandal. In November 2022, the Consumer Financial Protection Bureau ordered Carrington to pay $5.25 million in fines for supposedly violating borrowers' CARES Act rights. The CFPB claims that the lender misled borrowers seeking CARES Act forbearance and denied them key protections provided by the pandemic-era law.
Carrington Mortgage Services Pros and Cons
Pros
- Variety of non-QM loan options, including for borrowers with poor credit
- You may qualify with a recent foreclosure or other negative credit event
- FHA loans and VA loans allow scores down to 500
Loans for Low Credit, Recent Negative Events, and More
If you have a rocky credit history or a low credit score, you might be able to get a mortgage with Carrington. The minimum credit score requirements for its government-backed mortgages are much lower than many other lenders, and it has non-QM options for bad credit as well.
Cons
- Not available in Massachusetts or North Dakota
- No home equity loans, HELOCs, reverse mortgages, or construction loans
- Somewhat high rates and fees
Limited Conventional Loan Options
Though Carrington offers extensive non-QM loan options, its standard offerings are pretty limited. You won't be able to get a construction loan or reverse mortgage with this lender, and it doesn't have any home equity loan or HELOC options.
What Borrowers Are Saying About Carrington Mortgage Services
Business Insider looked at positive and negative customer reviews, online forums, BBB complaints, and other sources to understand what borrowers think about Carrington Mortgage Services.
Positive Experience With Knowledgeable Loan Officers
We saw many comments from previous borrowers who spoke positively about their experience getting a mortgage from Carrington. Overall, they found their loan officers to be professional, knowledgeable, and helpful in getting them through the mortgage process.
We did see some complaints about Carrington's mortgage servicing from borrowers who had their loans sold to the company. Complaints about servicers (the company that you make your monthly mortgage payment to) aren't uncommon, and we don't think it's necessarily a reason to avoid getting a mortgage from Carrington.
Carrington Mortgage Application Process
Start online or over the phone
You can start your Carrington loan application online or over the phone. If you want to do an online application, you'll answer some questions about your homebuying budget and your finances. This includes your estimated purchase price, down payment, income, credit score, and where you want to buy.
This will give you an initial estimate of what loans you might qualify for and their rates and fees. If you want to move forward, you'll need to submit your contact information so someone can reach out to you.
Prequalification, approval, and closing
Then, you'll be able to get prequalified. Prequalification gives you an estimate of how much house you can afford, but it's not a guarantee. Once you are under contract on a house and apply for full approval, underwriters will take a closer look at your finances, verifying your income and assets. If everything looks good, you'll be approved for the loan and start preparing for closing.
Your loan officer will walk you through the application process and answer any questions you have.
How Carrington Mortgage Services Compares
Carrington Mortgage Services vs. Fairway Independent Mortgage Corporation
Fairway Independent Mortgage Corporation is a strong, affordable mortgage lender that offers a variety of mortgages, including renovation loans, reverse mortgages, and physician loans. It also has a $7,000 grant for homebuyers.
But if you have a rocky credit history, Carrington might be a better fit for you. While you may be able to get a government-backed loan with a low score from Fairway, Carrington has multiple loan options that accept scores in the mid-to-low 500 range.
Fairway Independent Mortgage Corporation Review
Carrington Mortgage Services vs. Guild Mortgage
Guild Mortgage and Carrington are two of the best lenders for first-time homebuyers thanks to their flexible credit options. Guild is an especially good choice for borrowers because it offers such a wide variety of mortgages, including reverse mortgages, renovation loans, manufactured home loans, and ITIN loans.
Both lenders offer options for borrowers who might not qualify with other lenders due to their credit situations. With Guild, you can qualify with non-traditional credit (such as rent payment history) on some of its loans if you don't have an established credit score. Carrington has its non-QM options for borrowers with low scores or recent bankruptcies or other negative events.
Carrington Mortgage Services FAQs
Carrington Mortgage Services has a 4.93 out of 5-star rating on its Zillow lender profile, which is based on reviews from people who got a mortgage from this lender. Carrington is a particularly good lender for those who have low credit scores or recent negative credit events.
Carrington was ordered to pay $5.25 million to the CFPB in 2022 after the agency claimed that Carrington "unlawfully withheld legally mandated pandemic protections, wrongly imposed fees, and reported false information to credit reporting companies," according to CFPB Director Rohit Chopra.
Yes, Carrington Mortgage Services is a legitimate mortgage lender that's been around since 2007.
Carrington is a direct lender. This means it originates its own mortgages, as opposed to a mortgage broker, which connects you with multiple lenders to find the best fit.
Carrington's rates are a bit high compared to other lenders, based on our review of HMDA data,
Carrington has many positive reviews from previous customers who say that the lender offers great customer service.
Why You Should Trust Us: How We Reviewed Carrington Mortgage Services
To review Carrington Mortgage Services, we used our methodology for reviewing mortgage lenders.
We look at four factors — loan types, affordability, customer satisfaction, and trustworthiness — and give each a rating between 1 and 5, then average these individual ratings for the overall lender rating. Lenders get higher ratings if they offer a high number of loan types with affordable features, have positive customer reviews, and don't have any recent public controversies.
