How to Get a Mortgage With a Bad Credit Score
If you have bad credit, don't despair -- you can still own a home. There are a variety of ways to get a mortgage even if you have a bad credit score. It will require diligence and perseverance, but you can do it because it has been done many, many times.
Other People Are Reading
Instructions
-
Get A Mortgage Even With Bad Credit
-
1
Try to get owner financing. A home for sale in which the owner is willing to finance all or most of the asking price is called owner financing or seller financing. Owner financing is one of the best ways to get a mortgage when you have a bad credit score or if you cannot prove your income.
-
2
Assume an old VA or FHA loan. Older government loans (prior to 1976) allowed buyers to assume the old loans without the buyer qualifying as normally would be required through a bank. You will run into these assumable loans occasionally. If you can find one, all you need to do is pay the owner the equity he requires and take over the payments. The transaction can be handled in the real estate broker's office.
-
-
3
Consider a lease purchase agreement. You might lease your home with an option to purchase later. This allows you to control the home until you can qualify for a regular mortgage at an agreed-upon point in the future. Options to purchase may be transferable so you might sell your option if necessary.
-
4
You may be able to get a refinancing loan when you have a lease purchase agreement, even if you have bad credit. The bank will sometimes treat the lease/option to purchase agreement as if it were your original mortgage. So you are essentially taking an end run around having to qualify for a traditional mortgage -- bypassing it to go to the refinance loan.
-
5
Try creative financing. This can cover a wide range of options. You might exchange property or services with the owner. You might offer to pay a down payment with stock in a company. You could trade equity in one property as payment on another property. Get creative and you will think of something to offer to the owner in exchange for your dream home.
-
1
Tips & Warnings
Certain loans are more flexible in terms of accepting buyers with lower credit scores. The FHA loan program is one. Offering a variety of loan programs at reasonable rates, FHA provides a wealth of information on qualifying for FHA loans at its website.
