Mortgage Blog

Buying home is important decision in life. However, with Bad credit it will be like really difficult. In this article, I will show you ways to buy home with bad credit.  

About Credit Score: -  

Credit score shows the creditworthiness of the borrower. This score is assessed by the lender to see risk of lending money to borrower. Credit score ranges from 300 to 900. It also shows ranges from excellent (more than 800), good (670 to 799), fair (580 to 669) and bad (below 579. Your Credit Score is Determined by payment history, credit history, new inquires and Credit utilization. 

Difficulty to buy home with bad credit 

Traditional Lenders/banks 

It will be really difficult to get mortgage approval from bank if you have credit score below 600. They have strict requirements to lend money  

Higher monthly mortgage payment 

If you approved with bad credit then you will have higher interest rate and you will end up paying higher monthly payment.  

Down Payment 

When you have bad credit then lender will ask for at least 20% or more in down payment so, lender can reduce the risk. 

Ways to buy home with Bad credit 

If you can't get loan from bank or traditional lender then there are few options for you  

Private lenders and B type lenders have more flexible requirements. They charged higher interest rate because of risk involved. They also require to have at least 20% down payment. Only downside working with private lenders is that they charged higher interest rate.  

Government Programs: -  

First time buyer incentives: - Government announce this program to help first time home buyer to reduce monthly mortgage payment.  

Rent to own program: - It is program in which you can rent home for specific time may be 1 to 3 years and then buy at the of the agreement.  

If you have any questions and guidance then contact me and i will help you to buy your dream home.