Can you qualify for a home mortgage loan with bad credit?

FACT: The mortgage and credit crisis which exploded onto the scene in 2007 has eliminated bad credit and bruised credit mortgage loans. Lenders simply don't offer bad credit sub-prime home loans anymore.

What’s Your Credit Score?
Every lending facility uses guidelines to determine your credit worthiness. Upon reviewing your application, you’re given a credit grade and a determination regarding your loan’s approval or denial. Lenders DO NOT give loans to those with bruised credit anymore. If you are denied by one lender, contacting 10 more will likely just get you the same no answer.

What credit score do I need for a home loan?
Generally speaking, in today's mortgage world, if your middle credit score is below 640, it is very unlikely that you will qualify for home loan financing no matter what anyone tells you or you see elsewhere on the internet. With a score below this level, you really should save yourself the hassle. Stop attempting to find mortgage loans, and work on improving your scores instead.

Review your credit score?
If you are not sure what your credit score is, you should officially find out.
Apply for the mortgage loan, and let the mortgage lender review your exact situation. DON'T ASSUME YOU CAN'T QUALIFY!

Credit score graphCREDIT PROBLEMS & ANSWERS

Late Payments
If your credit has multiple RECENT 30, 60, or 90 plus day late payments, you probably won't qualify. Especially if those late payments occurred LESS THAN than two years ago. Lenders want a clean recent payment history.

Collections, Judgements, Tax Liens
If your credit history indicates unpaid collection accounts, most "A" grade loan lenders will require these amounts to be paid off before the loan is funded. FHA typically will ignore them if they are under $500, and more than 2 years old. Medical collection "usually" are ignored. Judgments' (you got taken to court & lost), are almost always REQUIRED to be paid off before approval.

Bankruptcy & Foreclosures

  • If your bankruptcy is more than two year old, you can usually be approved for an FHA loan with as little as 3.5% down.
  • If your foreclosure was recorded is OVER least three old, you may qualify for an FHA loan with as little as 3.5% down payment.
  • If your bankruptcy is older that 4 years, and you have good re-established credit, you may now qualify for an standard conforming loan.
  • High Debt Ratios
    If your income-to-debt ratios are too high, you can either reduce your personal debt (i.e., pay down your debt), obtain a debt consolidation loan, pay down your debt with funds from the sale of personal assets (boat, camper, etc.), select a lower interest rate ARM loan, or add a co-mortgagor. 

    Is a debt consolidation loan for you?
    If you have any late payments on your record, part of the reason may be because of high credit card debt. If you qualify, you can pay off all of your high-interest credit cards into a low debt reduction refinance loan which may be tax deductible (unlike credit cards, which are NOT tax deductible).

    Call us at (651) 552-3681. Speak to a mortgage professional who can help determine your credit status - its a FREE service!

    Basic Pre-Approval

    Get the Best Mortgage Rate!

    Tell us a little about your current needs and we can use that
    information to match you with just the right loan.
     
    Tell us about your loan needs.
    *Reason for loan (purch, refi, cash out):
    *Value of property:
    *Type of property:
    *Amount you need to borrow:
    Type of loan wanted (30 Yr, 15 Yr, ARM, Int. Only):

    How can we get in touch with you?
    *Name:
    *Email:
    Phone:
    Address:
    City:
    *State:

    Tell us about your credit history.
    *Credit History (Excellent, Good, Average, Poor):

    Note: Fields with an * are required

    Mortgages Unlimited Minnesota
    33 Wentworth Ave E, St Paul, MN 55118
    (651) 552-3681

    Member, Minnesota Mortgage Association

    Search for homes for sale - for free

    Mortgages Unlimited, Inc. NMLS # 225504. Joe Metzler NMLS # 274132



     
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