Bad Credit Mortgage FAQs
There are many reasons why
individuals have bad credit.
With the current economy you may have been laid off from your job or you may
have incurred some serious medical bills. No matter the reason you
fell behind in your payments, having bad credit does not mean you can't qualify for a bad credit mortgage on
a home loan or a mortgage refinance.
The following FAQs will help you understand more about what a bad credit
1. What is the definition of a bad credit
score? Conventional Fannie Mae, Freddie Mac, FHA or VA loans require a score above
620. Even a
credit score above 620 is not an automatic qualifier if you have too many late payments during the past 2
2. What is considered a bad credit
history? When payments have frequently been more than 30 days late for a period of time you will have a
bad credit history.
3. Can I get approval for a home loan with a bad
credit score or history?
Yes, if you meet certain other criteria, including a stable
4. Will my interest rate be extremely
high? Your interest rate on a bad credit mortgage will be higher than on a conventional, FHA or VA
loan; however, all loan rates are lower than they were 10 years ago.
5. Will I need a large down
payment? Yes. The requirements for a bad credit mortgage loan or mortgage refinance are generally higher
than for a traditional loan.
6. What is the waiting period to get a home loan after
a foreclosure? You will have to wait a minimum of 3 years to get
an FHA loan.
7. What is the waiting period to get a home loan after
filing for bankruptcy? Depending on the type of bankruptcy, you may be able to get into a loan after just 2 years, or
even 1 year if there are extenuating circumstances.
8. There are late payments on my current mortgage; can
I qualify to refinance? If your late payments are less than 30 days late, they will not show up on your credit
with a payment that is 30 days late you may be able to qualify for mortgage refinancing. Lenders will look at other
things such as cash reserves, income, job stability, amount of debt, and so forth.
9. What if I owe more on my current mortgage than my
house is worth? If you are upside down on your mortgage, you will not be able to refinance, but you may
qualify for a loan modification to help reduce your payment.
10. What type of documentation will be
required? While documentation varies, you may need a photo ID, 2
months recent bank statements, income verification, and possibly tax returns.