Can you get a home loan with bad credit? The answer
is... YES, Maybe, it depends.
mortgage company uses a credit report to determine your credit worthiness. All
credit activity for the past 7-years is on your report. Good, bad, or otherwise.
Foreclosures and bankruptcies show up for 10-years. Obviously
paying your obligations on time is important, and missed payments, collections,
and judgements hurt your
score. But there is much more than that factored into your score too. How much
debt do you have, how long have you had credit, how many accounts do you have.
Do you have different types of credit; say a car loan, home loan, and a few
credit cards. Or do you just have credit cards?
Next, understand a lot of the credit score isn't about you personally, but also about the population in general. If similar people with similar profiles tend to do similar things. You probably will too. For example, those who carry high average balances on credit cards tend to default at a much higher rate. Even if you've never been late on your credit cards, if you are carry high balances, it is assumed you will likely default, and you are given a lower credit score.
What credit score do I need for a home loan?
With a score below 580, your odds are very slim, and most people really should save themselves the hassle. Stop attempting to find mortgage loans, and work on improving your scores instead. Once you have achieved a 620 or higher score, you should be in much better shape. If you are denied by a one lender, contacting 10 more probably won't help.
Are alternative, bad credit loans available? Yes. Sub-prime bad credit loans are available if you have a significant down payment. Usually this means a down payment of at least 20% of the purchase price or more. Down payments of at least 10% are potentially available too.
Expect to pay interest rates around 2% higher than traditional loans, but at least you may have some options.
You can always refinance your bad credit loan in the future once your credit situation improves.
CREDIT PROBLEMS & ANSWERS
If your credit has multiple RECENT 30, 60, or 90-day late payments, you probably won't qualify. Especially if those late payments occurred LESS THAN than two years ago. Lenders want a clean recent payment history.
Collections, Judgements, and Tax Liens
If your credit history indicates unpaid collection accounts, most "A" grade loan lenders will require these amounts to be paid off before the loan is funded. FHA typically will ignore them if they are under $2000, and more than 2 years old. Medical collection "usually" are ignored. Judgments' (you got taken to court & lost), are always REQUIRED to be paid off before you can get a mortgage loan.
If your bankruptcy is more than 2-year old, you can usually be approved for an FHA loan with as little as 3.5% down.
If your chapter 7 bankruptcy is older that 4-years, and you have good re-established credit, you may now qualify for an standard conforming loan.
If your chapter 13 bankruptcy is 2-years after discharge date and you have good re-established credit, you may now qualify for an standard conforming loan.
If your chapter 7 bankruptcy is 2-years after discharge date and you have good re-established credit, you may now qualify for a VA loan.
If your chapter 13 bankruptcy has at least 1-year of on time payments, you may now qualify for a VA loan.
If your chapter 7 bankruptcy is 3-years after discharge date and you have good re-established credit, you may now qualify for a USDA Rural Development Loan.
If your chapter 13 bankruptcy has at least 1-year of on time payments, you may now qualify for a USDA Rural Development Loan.Foreclosure
If your foreclosure Sheriff Sale Date is OVER 7-years old, you may qualify for a standard conventional loan.
If your foreclosure Sheriff Sale Date is OVER 3-years old, you may qualify for an FHA loan with as little as 3.5% down payment.
If your foreclosure Sheriff Sale Date is OVER 2-years old, you may qualify for a VA Loan with Zero Down Payment.
If your foreclosure Sheriff Sale Date is OVER 3-years old, you may qualify for a USDA Rural Development loan with Zero Down Payment.Short-Sale or Deed in Lieu
If your short-sale date is more than 4-years old, you may qualify for a conventional loan
NO waiting period after a foreclosure for an FHA Loan if you had NO late payments on ANY mortgage or consumer debt in the 12-months proceeding the short-sale AND it was NOT a strategic short sale.
If your short-sale date is more than 3-years old, you may qualify for an FHA Loan loan
If your short-sale date is more than 2-years old, you may qualify for a VA Loan with zero down payment
If your short-sale date is more than 3-years old, you may qualify for a USDA Rural Development loan with zero down payment
Mortgages Unlimited, Inc - St Paul Office
33 Wentworth Ave E, Suite 290
St Paul, MN 55118
Office (651) 552-3681
Fax (651) 994-6425
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VA, and USDA Approved Lender
We are an Approved Lending Institution for FHA, VA, and USDA Government Loans. While we are an approved lender, we are not part of HUD, FHA, the Veterans Administration or the United States Department of Agriculture. We are not acting on behalf of, or under the direction of HUD/FHA, VA, USDA, or the Federal Government in any way. FHA and VA do not lend directly to the public, only through approved lending institutions like Mortgages Unlimited.
Mortgages Unlimited, Inc. Nationwide Mortgage Licensing System and Registry (NMLS) # 225504 Saint Paul Branch - NMLS # 387944. Joe Metzler, Licensed Mortgage Loan Originator NMLS # 274132. Lending in MN, WI, and SD only.
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