Bad Credit First Time Home Buyers Loans

Bad credit first time home buyers loans do exist and it’s always worth checking out if you can purchase a home. When you are renting, the money you pay each month is gone forever unlike payments to a mortgage which is an investment. If you have a bad credit score then you are by no means alone.

If you are unable to acquire home buyers finance from what is known as the prime market (High Street Banks) then you will have options. There is a vibrant subprime market that caters for bad credit home buyers loans but tend to have higher interest rates. After all it’s considered more of a risk to lend to someone with poor credit and that’s why they expect more reward.

There is also the Federal Housing Administration or FHA that can help people with low incomes and poor credit buy a home. Qualifying for an FHA home loan is probably the easiest of all mortgage requirements to meet. Here are the basic criteria for qualification:

• You should be looking to commit no more than 30% or you pre-tax earnings to your proposed mortgage payment
• At least 2 years steady employment
• Your income should not have gone down over the last 2 years
• A credit scoring of 620 or higher but sometimes no score at all because you’ve had nothing to score on
• Bankrupts must have no flaws in their credit reports since being discharged
• Bankruptcy must be at least 2 years old
• Any foreclosure or repossessions must be followed by 3 years of faultless credit
• No more than 2 monthly payment defaults in the last 2 years

Many sub-prime lenders have similar standards of qualification and those are all important factors. There are a few other moves you can make to make your mortgage application more successful. If you can save a good down payment then you will have demonstrated that you are good with money. This will always help when presenting your case to a lender.

You should also pay off any debts before you apply because other debts will be a factor in how much you can borrow. Other debts and expected mortgage payment combined should not come to more than 41% of your gross income. If you can show a history of good debt management then obviously you will be a better mortgagee. Credit cards also count as long term loan agreements so get the balances down if you can.

When talking through your bad credit history, you should be honest about times when you failed to meet payments for any reason. If you had a genuine reason for being financially unstable at that time then explain why it was an unusual circumstance. They will have heard it all before so there’s no shame in making mistakes.

Bad credit first time home buyers loans are intended for people who genuinely want to manage their money properly. If you have the right frame of mind and have stayed that way for the last 2 years then you can buy a home. Just remember that lenders are in the money business not property business. They want to make money from lending and not by foreclosing and selling assets.