Bad Credit Home Loans
Often, we get inquiries from people with bad credit that seem to automatically assume that they’re doomed in finding a mortgage or home loan and that their lower than average credit history will prevent them from getting financing, however, this is not always the case.
Home Loans For Bad Credit
Time and time again we see people renting when they could actually buying their home. Loan programs do exist for people that have bad credit. All is not lost and there are lenders who will allow certain amounts of debt, they just require a more thoughtful and time consuming application process which explains to the lender why credit may be damaged or justify certain items that may exist on your report pulling down your scores. There are also opportunities to repair credit, even if just enough to bring a credit score up to a workable level.
The below are examples of programs that cater to bad credit situations.
- FHA/VA: These loans are called “full-doc” loans which require tax returns, and bank statement. FHA allows for a credit score as low as 600 in some situations. When a score is low underwriting will typically take longer and the loan will have more conditions, however, it does not mean you cannot obtain a mortgage.
Some lenders will do cash-out refinances with a score of 600, yet it will be limited, but again, does not mean a mortgage is unobtainable. Your credit score will affect your rates and loan to value requirements, but not overall qualification.
- Non-QM: A Non-QM loan is a special loan for people with bad credit; a type of loan that can be approved for a person who would ordinarily be considered a “non-qualifying” buyer.
We can do Non-QM loans for persons with as low as a 600 FICO score. Underwriting will have more conditions and if the situation includes a purchase, these loans may require a minimum down payment. These lenders will also do cash refinance most likely at a seventy percent loan to value. These loans allow for the use of bank statements as a way of proving income if you cannot prove income in the traditional manner. Rates will be higher in most cases, but again, the mortgage remains obtainable.
If you are in a situation where you have bad credit, do not make the mistake of assuming, without advice, that there are no options available. Lenders look at a variety of factors, including down payment, job history, assets, and other factors when it comes to loans designed for persons with less than stellar credit.