Buying a house with poor credit | How to Buy a Home with Bad Credit Scores

How to Buy a Home with Bad Credit Scores

It’s still possible to buy a home today even with low or poor credit scores. It’s not as hard as you might think. You have to get a lender that will focus on other things besides your bad credit score. A poor credit history is bad, but it’s not the end of the world when you want to buy a house. Hopefully you have most of the positive traits lenders are looking for when they are underwriting someone for a home loan that has poor credit scores.

Having verifiable income when you go to the lender will be a big plus. If you’re self-employed or just started at a new job it may be harder to provide a solid history of income. The payments on your bills must absolutely be up to date. Whatever caused you to receive a poor credit score should be in the distant past.

Having a decent down payment will make the process of buying a house with bad credit a lot easier. If your down payment is large enough, most lenders may overlook any past credit problems. If you’re able to borrow money from family for the down payment do so, the larger the down payment the better.

Even if you don’t have a down payment, it may still be possible to buy a home with poor credit by paying for private mortgage insurance. This insurance protects the lender from a default when there is no down payment. The cost of PMI depends on the amount of the loan.

You may still be able to buy a home even after a foreclosure or bankruptcy. A bankruptcy remains on your credit report for ten years. But you may still be able to receive good rates on your mortgage after four years after filing bankruptcy and the time you apply for your new mortgage with bad credit.

Buying a home after a foreclosure should be after two years. Some lenders will make loans after six months after filing bankruptcy or foreclosure, but most require twenty to thirty percent down payments including extremely high interest rates.

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