It is still possible for
you to get a mortgage loan with bad credit. However, most mortgage
lenders do pay heavy attention to your credit score. This is because your credit score is an
indicator of your future payment pattern, and lenders want to know that they
can rely on you to make your payments on time.
As far as you going
about actually getting the mortgage and deciding who to go with, Federal
Housing Administration's loan program is the most commonly used program for
those with a less than perfect credit score.
The minimum credit score to qualify for this program is 580 and will
also require a 3.5 percent down payment.
More commonly, however, most lenders will require an even higher score
to qualify for this loan. This requirement
is between 620 and 640. You will also be
required to meet or exceed the lender's debt-to-income ratio (usually 41-43
percent of your gross monthly income maximum).
Housing Administration loans have higher mortgage insurance interest rates
because of their lower credit requirements.
Unless a larger down payment is made initially, the mortgage insurance
payments must be kept up with throughout the entire span on the loan. However, with that being said, the actual interest
rate on the mortgage loan itself is not much higher than average mortgage loan
So, as far as getting a
mortgage, depending on how bad your credit score is, it is still possible. If you find that your credit score is too low
for you to qualify, you can look into repairing your credit score so that you
can apply for a mortgage in the future. Some
suggestions for repairing your credit are always paying at least the minimum
amount due on your credit cards, not spending all the way up to your credit
limit, and do not open new credit cards.
So, once again, you do
have many options available to you. It
all depends on your actual credit score as to which mortgage loans you
qualify for. You also have the option of
taking extra steps to raising your credit score so that you can apply for a mortgage
that will better fit your current needs and lifestyle.