financing home repairs to avoid further damage

Finding A Mortgage Loan With Bad Credit: An FAQ For Prospective Homebuyers

13 June 2017 by Albane Francois

Your credit has suffered a few blows through the years and your score is definitely far from perfect, so does this mean you will not be able to get a mortgage loan on a home? Thankfully, there are options for people with less than perfect credit who want to buy a home of their own. If you have a dream of owning your own home but you feel your credit history is not worthy of consideration by a traditional mortgage lender, you are bound to want to know your options. Take a look at some of the most common questions prospective home buyers with bad credit tend to have and the answers you should know. 

What are some of the options available for buyers with poor credit?

Your options for obtaining a home loan with bad credit may seem limited, but there truly are options that could work for you. Just a few of the available mortgage options that may work for you with low credit include:

• Federal Housing Administration (FHA) home loans, which are available to buyers with lower credit scores and are covered by FHA insurance
• Cash reserve based loans, which require you to have a certain amount of money in the bank to be approved
• Mortgage loans with a cosigner, which requires someone with better credit to apply jointly with you for the mortgage

If you have bad credit, does it automatically mean insane interest rates or high payments?

One of the downfalls of having a lower credit score is the fact that it can mean higher interest rates on a loan, and this includes a mortgage loan in some cases. However, lenders who work with prospective borrowers with lower credit scores do sometimes have special programs available to help you out and keep interest and payments as low as possible. After all, high interest and high payments can make it more likely that you will have problems repaying, so most are more than willing to help you find programs that will work for you. 

Is it true that you have to have a bigger down payment if you have bad credit?

It is not always true that you have to have a huge down payment if you have bad credit and get approved for a mortgage loan. If you go through a traditional lender and accept some forms of home loans, they may indeed ask for a higher down payment. But, some of the programs available, such as FHA home loans, actually require a lower down payment and, as noted previously, FHA loans are available for people with lower credit scores.

For more information, talk to companies like Fairway Independent Mortgage.

Share