How can you purchase a home with bad credit?
Jan 31, 2009 in
Financial and Loan Tips
Amanda O
I have bad credit but cant get a home loan.
I have bad credit but cant get a home loan.
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11 comments
Mike on February 2, 2009 at 2:06 am
You need a huge down payment… at least 20%. And even then you will pay higher interest.
The days of people with poor credit getting a house with little or no money down are gone.
ignorantseeker ofthe alternative on February 3, 2009 at 9:40 pm
Look in the paper for lenders that advertise, bad credit, bankruptcy, you may have to pay a larger down payment, and suffer the penalty interest rate, but in a few years you can refinance for a lower interest rate once you have established “good” credit.
bdancer222 on February 7, 2009 at 7:14 am
You need to fix your credit and establish a 2 year history of consistent, on time payment.
You also should save up for a downpayment.
Hokijamoki on February 9, 2009 at 2:52 am
Have a decent down and find an owner financed home. Many times when the owner finances you don’t have to have the same credit as a conventional mortgage. Make sure you still go through escrow so title is recorded in your name.
After you have owned the home for a while, apply for a conventional mortgage.
You can also look for a lease option. This is where you lease a home with the option to buy. Sometimes under this kind of arrangement you can apply some of the lease payments to the down payment of the home. I’ve seen these kind of arrangements advertised in the paper all the time. In fact, you might be able to get into a lease option for as little as $10,000 down, maybe even less. Once again, make sure your interests are recorded.
smittnwithkittns on February 11, 2009 at 3:13 pm
HUD has a program that has no credit requirement. It caps off alittle under $400,000 so you can’t buy anything too expensive. You should check out the HUD website to see what lenders in your area participate in their program. You do not need a down payment.
Monika Wilson on February 14, 2009 at 7:59 pm
There are quiet some lenders out there, willing to lend you money even with bad credit. Interest Rate most likely will be higher since the lender is taking a higher risk.
May be you (or your Real Estate Agent) can find a home you like and the seller is willing to work with you on a fair lease purchase for about 1 or 2 years. Until then your credit should be repaired enough that you can qualify for a conventional loan and pay the seller off. If you would like to consider this option you should work with a Real Estate Agent or a Real Estate Attorney to help you throu the small print in the Lease Purchase contract. Terms, payments and time have to be agreed on, plus the conditions, interest rate and how much of your monthly payment is going towards the purchase price. Also who is responsible for property taxes and insurance, for repairs and so on.
Might be an alternative for you.
Michael M on February 16, 2009 at 12:04 am
You don’t need any credit to obtain an FHA loan. You do need at least a 3% downpayment and a steady job that supports the monthly payment. Ideally the entire load of your debts, after the mortgage payment is factored in, should not be higher than 42% of your pretaxed monthly income dollars. Loan limit restrictions do apply in all counties of the US.
Gregg on February 19, 2009 at 4:37 am
2 words:
Lease Option!
Google it.
Jacob m on February 20, 2009 at 10:49 pm
There are hundreds if not thousands of websites on the internet enumerating the ways to apply and receive home loan when you are plagued with bad credit issues. These sites help consumers with bad credit scores to increase the viability of their existing credit scores and set up loans regardless of their credit history.Companies that specialize in bad credit home loans; usually offer a wide range of options for consumers with bad creditBad credit hasn’t stopped them from purchasing a home. There are several programs available for people with bad credit that helps to restore their credit status and to live debt free lives.
Gary H on February 21, 2009 at 3:02 am
Don’t lose hope if you’re looking to buy a home. There are so many different ways to fund a home now, just about anyone with any kind of credit can get into a home, regardless of credit situation.
Of course, some will cost you more money in the long run, but a home it’s still one of the best investments that you can make, so, in many cases, it’s worth it, especially for the first year of ownership.
You should shop around, and ask different lenders what kind of programs they have, and if they can help. Try to find a lender that specializes in bad credit mortgages. You can find some bad credit mortgage lenders listed on this page on and off:
Lucky Me on February 22, 2009 at 1:41 pm
Find a hard money lender.
These are people who loan money at a slightly higher interest rate than banks as they do not concern themselves with your credit score as much as they are interested inthe property you wish to purchase. They finance your home purchase.
If you default, they can take you into foreclosure and eventually take the property. They aren’t really interested in the property – it’s just collateral. Loaning money to you for your home purchase at a rate of say 8-13% over 15 – 30 years is a better investment than letting their money sit in the bank at 5% or less.
You make your monthly mortgage payments to them. Be sure to get no penalty for early pay clause in your agreement.
Most people like to rebuild their credit, pay off the hard money lender and get the property refinanced via a bank at a lower interest rate later.
Good luck!