When you find the perfect home, it is important to secure a pre-approved home loan. A credit rating plays a big part in obtaining a home loan, and having a low credit score will negatively impact your ability to get a home loan. However, it is still possible to become pre-approved for the home loan, you just are not going to be approved for as much as someone with a high credit score.
Save up a down payment. It is extremely important to have a down payment. If you do not have more than 10 percent of the home's value, you are required to pay an additional mortgage insurance. This increases the monthly payment of the home.
Locate back tax returns for at least the previous two years. This shows how much money you are making (the home loan individuals typically add the two tax returns up and divide them by two to obtain an average yearly income).
Include any other monthly payments you make, including school loans and car payments.
Fill out the initial loan information and submit it to the loan providers. It is best to apply for a home loan through a bank or credit union that you are a part of. Financial institutions are more likely to give out money to individuals they know.
Wait for the results. It may take a few days to hear back from the financial institution. You are likely approved for the home loan; however, due to the bad credit rating, the interest rate is higher and the amount you can purchase is lower.