How do I buy a home with less than perfect credit?

Where are you located? I can get you to the right place if I know what state you are in.

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Originally Posted by jenniepepsi

where are you located? i can get you to the right place if i know what state you are in.

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Location doesn't really matter when it comes to bad credit.

To the OP, work on repairing your credit first. You want to be in the best possible position to get a loan. Due to state of the economy- which is affecting everyone (even if you're not in the US)- banks are less likely to take the risk if you don't clean up your credit first.

Pay off some debts. Don't take out any other loans (vehicle loans, small bank loans) and don't open any new installment accounts (credit cards). Repair what you have.

Once you get your credit cleaned up, save up a large downpayment- shoot for 20%. This will also put you in a better position to get a great rate as well as manageable monthly payments.

I was asking just because there are many programs that aide familys with bad credit/no credit in buying a home.


This site may help. You can select your state from the list and it will take you to any assistant programs in your state

First Time Home Buyer Programs

Jennie: on the very link that you posted, it also suggests cleaning up credit before even applying for a home loan. Also, many "first time home buyer programs" require that the applicant's credit report be clean in order to qualify.

So again to the OP: I strongly advise taking care of any outstanding debts, charge-offs, etc so that you are considered by banks "Credit Worthy". It may take some time but it will be well worth it in the long run.

The current economy has stopped the process of getting approval with less then perfect credit.

That is why we are supposedly in the crisis we are in, so the banks have locked up loans, tighten restrictions and now it is harder to get a loan unless you are in good credit standing.

Hello:

The larger your down payment, the less important perfect credit becomes.

excon

You may also want to look at foreclosed homes if your credit is less then perfect, buying a foreclosed home, maybe cheaper - allowing a better down payment.

jenniepepsi agrees: i know. i wasnt suggesting that the OP does NOT fix thier credit. just letting them know what else is there too

The thing is, First Time Homebuyer's programs are often meant to assist with downpayments, closing costs, etc. in order to offer new buyers an incentive to purchase a home vs. renting. NOT to negate their responsibility of cleaning up their credit. Fannie Mae for instance, is a very reputable lending program that offers lots of incentives- but applicants must be clear/current on debts to even qualify.

But as excon said, if the OP can save up a sizeable downpayment then a smaller loan from the bank would be needed which would make qualifying easier.

The other question is "what does less than perfect mean to you"

Are we talking 720? 650? 450?

How bad is bad? What is your debt to income ratio? Is anything currently pending collection or is everything current, just old?

These are all factors in the process. If its bad from past transgressions and is in the process of repairing, bad might not be that bad.

My credit got trashed a few years ago. But I am current on everything, haven't missed a payment on anything in a few years and have a good debt to income ratio. They were more than happy to give me a mortgage. I had the benefit of a VA loan though. Your mileage may vary.

You will suffer higher interest rates AND a much much larger down payment