Need a mortgage loan for bad credit?

Most lenders now require you to have at least a 620 credit score. There may be other options out there but I am not aware of them.

The mortgage industry has made significant improvements during the last few years. People with bad credit now have several mortgage options. You must realize that you will not qualify for the lowest rates. However, interest rates with mortgage loans for bad credit are still readily available in the single digits.

The big question is:  “How bad is your credit?”

If you are unsure you can order a credit report.

Your credit score could range from 0 if you have never had credit or 350 to 850. With 850 being a perfect credit score. I personally view a credit score below 620 as bad credit even though it is still a decent score.

Once you drop below a 620 credit score this is when you will need to start looking at a mortgage loan for bad credit. The lower your score the higher the interest rates will be. Your home loan options will also start to decrease.

If you need zero down financing the lowest credit score you can have would be a 560. And I only know if one lender that I have access to that will do a 100% loan with that credit score. Most sub-prime lenders will go as low as a 580 credit score and a few more will go as low as a 570 credit score.  

If you need to refinance and pull 100% of the equity out of your home the guidelines from above apply as well. 

If you need to purchase a home and have below a 560 credit score you will normally will need a 20% to 25% down payment. If you are refinancing and have below a 560 credit score you will be limited to 75% to 80% of the value of your home. 

The lowest credit scores that you can still purchase or refinance a home with a bad credit mortgage would be a 475. You have to work hard at getting your credit that bad. But I have seen it. If your credit is worse than that you may need to look at doing a private money loan. 

If late mortgage payments are the cause for you needing a mortgage loan for bad credit there is still help for you too.  There are loans available that will allow for: 

Unlimited 30 day late payments. 

Up to three 60 day late payments. 

Up to one 90 day late payment. 

Your mortgage must be current at the time of application to qualify for one of these loans. You will also be limited on the amount you may borrow. The more late payments and the longer the late payments were the less you will be able to borrow.