Can I Qualify For Home Loan With Bad Credit?

Mortgage With Bad Credit

Home Loan With Bad Credit

Two most important factors in qualifying for a home loan are income and credit.  You can qualify for a home loan with bad credit but you cannot qualify for a home loan if you have no documented income no matter how great your credit is.  Your credit and credit scores will determine whether or not you qualify for a home loan now or at a later date.  If you intend in buying a home now or in the near future, you should consult a mortgage loan originator and see what your credit scores are and what is on your credit report.

What Is The Minimum Credit Score I Need To Qualify For A Home Loan With Bad Credit?

There are various types of mortgage loan programs.  The best loan program for home buyers looking for a home loan with bad credit is a FHA Loan.  FHA Loans are government loan programs where a home buyer with less than perfect credit and higher debt to income ratios can qualify for a residential mortgage loan.  Minimum credit score required for a 3.5% down payment home purchase FHA mortgage loan is 580 FICO.  You can qualify for a FHA Loan with credit scores under 580 FICO, however, any mortgage loan borrower with credit scores of 580 FICO or lower requires that they put a 10% down payment.

Credit Scores And Mortgage Rates

Credit Scores have a big impact on mortgage rates.  The lower your credit scores are, the higher your mortgage rates.  Home buyers planning on becoming homeowners should immediately review their credit reports and see what their credit scores are.  Credit scores can easily be improved by some quick fixes.  For example, if you have credit cards, simply paying down your credit cards can greatly increase your credit scores.  If you have no active credit tradelines, getting a few secured credit cards can instantly boost your credit scores.

Bankruptcy And Foreclosure

You can qualify for a home loan with a prior bankruptcy and foreclosure.  There are mandatory waiting periods after bankruptcy and foreclosure in order to qualify for a home loan.  For FHA Loans, there is a mandatory two year waiting period after bankruptcy discharge date to qualify for a home loan.  For a conventional loan, there is a mandatory four year waiting period to qualify for a home loan after the discharge date of the bankruptcy.  There is a three year waiting period after the recorded date of a foreclosure and/or deed in lieu of foreclosure to qualify for a FHA Loan.  There is a three year waiting period to qualify for a FHA loan after the date of a short sale.

Home Loan After Bankruptcy And Foreclosure

As mentioned in the previous paragraph, a home buyer can qualify for a home loan after bankruptcy and foreclosure as long as they met the mandatory waiting period after bankruptcy and foreclosure.  However, just meeting the mandatory waiting period after bankruptcy and foreclosure does not guarantee a mortgage loan approval.  Mortgage lenders want to see that the mortgage loan borrowers does not have any late payments after bankruptcy and foreclosure and has re-established credit.  Secured Credit Cards are the best tools to re-establish your credit after bankruptcy and foreclosure.

Recent Late Payments

You can have prior bad credit and qualify for a home loan, however, mortgage lenders want to see timely payments in the past 12 months. One or two recent late payments in the past 12 months is alright, however, if you had multiple late payments in the past 12 months, you may have to wait to qualify for a mortgage loan until you have shown timely payments for the past 12 months.

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