Real Estate


The Best Way To Qualify For a Home Loan With Bad Credit

How To Qualify For a Home Loan With Bad Credit
The question was asked, “Is it possible to qualify for a home loan with bad credit?”

And the answer is unequivocally, “YES!”

If you have been through a bankruptcy, foreclosure, repossession or slammed with credit card debt or student loans, that doesn’t automatically disqualify from obtaining a home loan.

You can get approved!

It just means you are going to have to work a little harder than a person with a great credit score. In this session, I’m going to share some tips and strategies to help you qualify for a home loan with bad credit.

The first thing you need to know is that there is an entire section of the mortgage industry that services those with bad credit. You’ll find them advertising along side the other mortgage brokers and loan officers. The key point to remember is this; they want your business! Secondly, and don’t be alarmed but people with bad credit do pay a higher price because lenders feel this compensates them for the additional risks they are taking.

Some homebuyers want to argue that point and counter with the fact that they’re willing to make a larger down payment. Honestly, it goes without saying, based upon our current credit scoring system that a lender is taking on a lot more risk by providing mortgages to people with less than prefect credit. That being said, remember the old saying about gold? It goes like this, “He who has the gold makes the rules!” They are the ones loaning the money; consequently, they make the rules.

Secondly, let’s clear the air about the recent changes in the mortgage industry. It goes without saying that they have left two groups of individuals anxious, disenchanted and somewhat confused and about their ability to qualify for a new mortgage; homeowners desiring to buy a home and current homeowners who want and in some cases desperately need to refinance. Certain mortgage companies have even went so far as to discourage borrowers who don’t meet their criteria which is:

  • Credit score must above 700
  • Documented income and assets
  • Money at hand for down payment

The unwritten criteria is what really throws people for a loop, these mortgage companies are essentially demanding perfect credit. Knowing the current environment, whether you want to obtain a loan for a new home or refinance an existing mortgage, the first step is to perform an analysis your credit score and finances and obtain a realistic view of where you are in terms of today’s financing market. If your credit score is below the 700, here’s your best option.

Take the time to clear up the issues and work towards bringing your credit score in the 650 to 700 range. This may take some time but the hassles are well worth the payoff!

Depending on the nature of why your credit is dinged up, you really want to consider holding off on purchasing until you have improved your score. Even though there are lenders who will work with you, your lower credit score puts you in the undesirable position of paying higher interest rates and other extra fees companies charge people with bad credit.

By far, the best option most people never really think about is owner financing or financing through a private lender. In these instances you don’t go through the mounds of paper work or jump through credit score issues.

Investors on the ground level understand the facts of life and the reality that things happen and they are always wiling to work with individuals with bad credit who can demonstrate an ability to pay on time.

Author, Joel Marks of


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