Can I Get a Mortgage with Bad Credit? Yes, and Here’s How You Can Make it Happen!
You might wonder if it’s possible to get a mortgage when you have bad credit. Well, the short answer is yes, it’s possible. Let’s break it down.
Understanding Bad Credit
First, let’s talk about what bad credit means. Bad credit usually refers to having a low credit score, which happens if you’ve had trouble paying your bills on time or if you’ve had debts go to collections. Lenders use your credit score to decide if they should give you a loan and what interest rate you’ll get.
Improving Your Chances
If you want to get a mortgage with bad credit, there are a few things you can do to improve your chances:
- Work on Your Credit Score: Try to improve your credit score by paying your bills on time and paying down any debts you have. This can take some time, but it’s worth it in the long run.
- Save for a Bigger Down Payment: If you can, try to save up for a bigger down payment. A bigger down payment can show lenders that you’re serious about buying a home and can help offset your bad credit.
- Consider Government-Backed Loans: Some loans, like FHA loans, are designed for people with lower credit scores. These loans might have different requirements and might be easier to qualify for. For example, FHA will accept credit scores as low as 580 for 3.5% down payment loan and as low as 500 for a 10% down payment loan.
- Get a Co-Borrower or Cosigner: If you have someone with good credit who is willing to help you out, you might be able to get a mortgage with their help. Just remember that if you can’t make your payments, they’ll be on the hook for them. For conventional loans – as of march 2024 Fannie Mae’s new guidelines instruct lenders to average both borrowers credit scores as opposed to previous guidelines where the lower credit score would be the considered score for the loan application .
The Role of a Mortgage Broker
If you’re feeling overwhelmed or unsure about your options, a mortgage broker like Maor “Max” Lavi with Superior Mortgage Lending can help. Mortgage brokers have access to lots of different lenders and loan programs, so they can help you find the best mortgage for your situation, even if you have bad credit.
