Home | Resources | Advertisement







Purchase a Home with Bad Credit

There are many reasons that people fall behind in their bills.  There may have been a layoff at work and it took you several months to get a new job.  You may have had some serious medical bills that it has taken some time to catch up on.  If you have fallen behind on some payments but are now back on track, your credit score will take a while to improve again.  If you have been planning to purchase a home and wondered if you could even though your credit isn't as good as it was, you will be glad to know that you can get a bad credit mortgage that is designed for people with less than stellar credit. 


Of course, your credit score is not the only factor that the lender will look at when you apply for a bad credit mortgage or mortgage refinancing.  He will look at your overall financial situation including your credit score and your credit history.  Here are some tips to help you buy a home with bad credit.


First, spend less money than you make, and save what you don't spend.  This sounds like simple advice, but it is a very important factor in purchasing a home.  Even with an FHA loan that requires the lowest down payment, you will need to have not only the down payment, but cash reserves for at least two or three months worth of house payments and enough to cover all of the closing costs.  If you are able to save money, it shows that you are financially stable. 


Next, don't change jobs or careers right before you buy a home.  If a job change is coming up, you should get your home purchased before the change, or you may have to wait 2 years unless the job is in your same industry.  The lender wants to see a 2 year employment history in the same field. 


Talk to a loan officer before you consult a realtor.  Getting a mortgage with bad credit will mean that you have stricter requirements.  If you are up-front about your financial situation with the loan officer, you will know what type of loan you can qualify for and the minimum down payment you need. Don't open a new credit account or have your credit run for at least 6 months before you want to purchase your house.  Even if you don't accept a new card, if you apply it shows on your credit report.  


Remember that even though your credit isn't the greatest, you can still get a mortgage refinance or a bad credit mortgage loan.