Home Purchase With Bad Credit: No Problem

There are still thousands of potential home buyers who believe that they do not qualify for a home purchase with bad credit.  There are periods of every hard working American’s lives where they go through periods of unemployment, underemployment, sickness, divorce, business loss, or other economic event where they suffer a substantial reduction of their household income where their credit scores suffer.  The good news is that as long as you have income to be able to afford that new home and have re-established credit, you can qualify for a home purchase with bad credit even if you have had a prior bankruptcy, foreclosure, or still have open unsettled credit and collection accounts.

Home Purchase With Bad Credit: Low Credit Scores

Conventional mortgage loan programs have higher credit standards than FHA insured mortgage loans.  Most conventional mortgage lenders require a credit score of a minimum of 620 FICO credit score.  However, if your credit scores fall between 530 FICO and 580 FICO, you can qualify for a FHA insured mortgage loan with a 10% down payment.  If you want to qualify for a home purchase with bad credit and only want to put a 3.5% down payment, your credit scores need to be a minimum of a 580 FICO.

FHA Loans Are Best For Home Purchase With Bad Credit

FHA insured mortgage loans are the best mortgage program for a home purchase with bad credit.   The Federal Housing Administration’s mission is to make homeownership affordable to all hard working American families and are very understanding with prior bad credit issues for home buyers.  There are certain mandatory waiting period requirements for those who had a prior bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale but anyone with a full time job or income can qualify for a home purchase with bad credit.  You can have unpaid unsettle collection accounts, charge offs, and previous late payments.  However, FHA insured mortgage lenders want to see timely payments for the past 12 months and re-established credit after a period of bad credit.

Credit, Credit History, Credit Scores, Credit Repair: Home Purchase With Bad Credit

As mentioned earlier, you can qualify for a home purchase with bad credit but under certain conditions.   You can qualify for a home purchase with bad credit as long as you had a period of a few years of bad credit but prior to that period you had good credit and after your period of bad credit, you are showing attempt of re-establishing your credit.  For example, if you have a ten year credit history, the first six or so years you had great credit and then on years of 7 and 8 your credit tanked but on year 9 and 10 you had no more late payments and have re-established your credit by getting a few secured credit cards and you have been timely on them, this will be a perfect ideal candidate for a new mortgage loan.  Mortgage lenders understand that people can go through periods of bad credit due to financial extenuating circumstances.  However, if you have good income and you have had a period of blatantly being late on paying your bills for the past ten years and even now have recent late payments, there is no mortgage lender that will approve you for a mortgage loan.  Not only is your current credit score important, but your credit and payment history is equally if not more important.

The information contained on Gustan Cho Associates website is for informational purposes only and is not an advertisement for products offered by The Gustan Cho Team @ Gustan Cho Associates or its affiliates. The views and opinions expressed herein are those of the author and/or guest writers of Gustan Cho Associates Mortgage & Real Estate Information Resource Center website and do not reflect the policy of Gustan Cho Associates Lenders Network, its officers, subsidiaries, parent, or affiliates.

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