How To Get Home Loan With Bad Credit

Federal Housing Administration (FHA) is the division of U.S. department of housing and urban development and according to FHA you can get a mortgage at minimum down payment but your credit score must be between 500-620, but the final decision will be taken by the lending banks, not FHA.

We can't ignore the role of credit in the mortgage procedure. The banks lend you behalf of your overall credit history. The bad credit or low credit might be the cause of disapproving of your application, the lenders consider as defaulter who has bad credit. You can get your yearly or monthly credit report from the bank or online, if your credit score is lower than 600, you will face more problem to qualify for a mortgage. But you should not get hopeless because lenders also see other factors to approving your application for the mortgage; such as your current income, credit statement, ability to pay your bills on time etc.

1) Bring down your debt: Most of the credit score depends upon debt. You should pay the credit card overdue payment or education/student loan payment on time to reduce the debt, late due payment might arise the problem to get qualify for a mortgage. A good effort to pay overdue can eliminate debt and attract the lenders. The five factors affect your credit score which is given below as chart.

2) The flow of income: To improve your credit score, you should maintain your income flow. The lenders notice your overall income with almost 02-year employment and ascertain your ability to pay the bills regularly. You should maintain your steady yearly income if you are self-employed, a strong income attracts lenders to give you a mortgage.

3) High interest as compensation: If you have bad credit score, lenders might hike the interest rate on your mortgage as the compensation. The interest rate might differ for different-different applicants on the basis of credit score. If your credit score is excellent, you can get the mortgage at lowest interest rate.

4) Visit your lenders: You can visit your lenders and explain them the reason of your bad credit score and provide all the proof of your payment history, proof of steady income of at least 12 months. Late student loan payments or medical bill or late charges may causes of your poor or bad credit score but lenders might be smooth at the student loan payments or medical bill but car loan late payment is a big cause of worse credit score. So if you have a car loan due payment with late charges, you should maintain your credit score first and after that visit to your lenders.

If possible, bring together a family member or partner for the co-signer who has good credit. Someone who knows you and your situation would be ready to help you. It will be helpful in your bad credit record.

If you are not eligible to qualify for a mortgage, you should wait until improving your good credit score.