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Home Mortgage for People with Bad Credit

Contrary to popular belief it is still possible for people with bad credit scores to get a home mortgage.

Lenders are willing to give mortgages to people who have bad credit scores because there are many with bad credit that have the money to cover mortgage payments. People with bad credit will have to pay higher interest rates and may face stricter terms on mortgages.

Mortgage underwriters charge people with bad credit higher interest rates because the lenders take more of a risk on such mortgages. Generally, the greater the risk the lender takes on a mortgage, the higher the interest rate they’ll charge.

How to Get a Mortgage with Bad Credit 

A person with bad credit will probably have to locate a mortgage lender who specializes in working with people with bad credit. Fortunately there are quite a few lenders willing to do this because they can make more money working such people.

A good place to find such lenders is online where many bad credit lenders advertise. Going to the websites operated by mortgage lenders will enable a person with bad credit to see if the qualify for a mortgage. The mortgage calculators on these lenders’ websites will also show the borrower how big of a mortgage they can qualify for.

Visiting several mortgage lenders websites can give a person a good idea of how their credit score is affecting their chances of getting a mortgage. It can also show person what he or she will need to do in order to get a mortgage.

Programs for Bad Credit Mortgages 

There are many programs and agencies that try to help people with bad credit get mortgages. The federal government and some state governments have special programs for homebuyers with bad credit.

 A person can learn about these programs by going to the Federal Housing Administration’s website. The Federal Housing Administration is the government agency that helps lower income people get housing.

There are also quite a few mortgage brokers and lenders who work with bad credit. In many communities there are real estate agents who specialize in finding homes for those with bad credit. These realtors often work with mortgage brokers who are experienced at getting mortgages for those with bad credit.

Down Payments and Bad Credit 

One way that people with bad credit can increase their chances of getting a mortgage is to be willing to make a large down payment. Making a large down payment will reduce the amount of mortgage principal a person has to pay which reduces the risk to the lender

It also demonstrates that the homebuyer is serious and capable of saving money. Those who are capable of saving up for a down payment will be more likely to make mortgage payments on a home.

It is possible for a person with bad credit to qualify for a home mortgage if that individual is willing to learn discipline and creativity.