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My husband and I are looking to buy a home, but we have bad credit. We have a good work history and a $ 10,000 down payment. Is there any type of home loan available for people with bad credit?

4 Thoughts on Is it possible to get a home loan with bad credit but steady work history and a good down payment?
  1. Reply
    falsi fiable
    May 18, 2013 at 2:59 am

    No. Mortgage lends don’t care if you make a big down payment. If your FICO Scores are under 620, you won’t get a loan. Lending standards are very strict now, and you will have better luck with a FICO Score of at least 700 (the US median FICO Score is around 720).

    Mortgage qualification requirements:
    1. FICO Score of at least 620
    2. 2 years solid work and income history
    3. 2 years of full tax returns
    4. Pre-tax annual income of at least 1/3 of the mortgage amount.

    The only thing affected by a large down payment is mortgage insurance. With 20% down payment, you don’t need PMI.

    Read “Home Buying for Dummies” to learn more about the entire process. Good luck!

  2. Reply
    May 18, 2013 at 3:28 am

    If you put down 20%, your best option is to contact a mortgage broker.

  3. Reply
    May 18, 2013 at 3:37 am

    Try going with an FHA loan. Their requirements aren’t as rigid as those of traditional mortgage financing and they are more likely to overlook certain credit issues as long as you and your husband can offer an honest, plausible explanation and you will have to do that for each and every credit issue that comes up, as mortgage lenders pull all three credit reports and not all creditors report to each CRA. You won’t need as much of a down payment–minimum 3.5% of the asking price–and credit score requirements are more relaxed. I plan to finance a home with an FHA loan in two years, since I filed bankruptcy and one of the requirements is waiting two years, establishing good credit during that time and even increasing income whenever possible.

  4. Reply
    Monte P
    May 18, 2013 at 4:11 am

    First question is…how much house are you looking to buy? Typically, you’re going to want to put at least 20% down (and with questionable credit, the bank will actually REQUIRE it). That would top you out at a $ 50,000 house.

    Next, if your credit score is below 620, then you might as well just forget it for now. If you *can* find someone who’ll lend you money, you are going to be paying a seriously high interest rate.

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