The idea that you can not get a home loan if you have bad credit is way off base. Nowadays, credit issues are a common problem and there are plenty of home loans out there for people with poor credit. This article offers information on some of these loans and provides tips on securing them.
Because there has been such a high demand for flexible loan programs, many lenders have begun designing home loans for people with poor credit. These loan programs allow borrowers to work around credit problems and other financial concerns.
The 80/20 Option
80/20 loans have recently become very popular, because these loans are essentially the perfect home loans for people with poor credit and no down payment. This loan option allows you to take out two loans to pay for your home purchase. The first loan covers 80% of the buy, and the second loan covers 20% (your down payment). In most cases, you can also use an 80/20 loan to avoid paying private mortgage insurance.
Co-signed loans are also great home loans for people with poor credit. These loan programs are easier to qualify for, because they allow you to use non-occupant co-borrower income sources on your application. This increases the amount of money you can qualify for, as well as your chances of being approved. All you need to do is find a friend or family member who is willing to co-sign for you.
Government Backed Loans
Home loans that are backed by the government, such as FHA loans and VA loans, may be easier to qualify for than traditional mortgages. Although the government does not actually loan you money for a home purchase, they will insure a loan from a traditional lender. This makes the lender much more comfortable giving out home loans to people with poor credit.