- 2 min read
- Take steps to improve your credit rating, if your credit rating causes you to be turned down for a mortgage loan.
- Look into FHA purchase mortgages, if you have less than excellent credit.
Bad Credit Home Purchase
qualifying for a loan to purchase a home is not easy, if you have bad credit. most lenders will turn you down, when your credit rating is not good, making it very hard or even impossible to find a way to buy a home.
until a few years ago, when the home real estate market and the mortgage market crashed, there were quite a few options for a "subprime" borrower. lenders were even willing to finance as much as 100% of the home purchase price, even for borrowers with poor credit.
currently, the options have narrowed for borrowers with less than good credit. there are two main approaches to take if you want to buy a home and your credit is proving a barrier.
improve your credit
a first step is to work on improving your credit score. if a lender turns you down for a loan due to your credit, find out exactly how many points you need to raise your credit score in order to qualify for the mortgage loan. no matter how poor your credit score, if you take the right steps, you can improve your score to a very good or an excellent rating within two years
a second option to look at is to research fha purchase loan programs. fha purchase loans have less strict credit requirements than traditional mortgages. because of this, fha loans are an ideal option to review for any credit-impaired borrowers.
in addition to less stringent credit requirements, fha loans are an excellent option for home buyers that have not accumulated a large down payment. while conventional loans often require you to put down as much as 10-20% of a home's value, fha loans may require as little as a 3% down payment. fha loans are available on manufactured and mobile homes as well. you can reach out to bills.com's network of lenders for help with fha loans.