Yes, it is still possible to buy a house with bad credit. There are a few options out there (even in today’s recession) that can avail you a home.Indeed, if you know what to look for, a recession can even afford you some amazing deals on homes. You can buy a foreclosed home for very cheap these days and the prices of houses has dropped significantly, making it a investment homes a steal. However, many of these opportunities will depend on having good credit. But if you don’t have good credit, don’t worry, there is still opportunity.

With bad credit quite common these days, it’s no wonder that people want to know if buying a house with no money down and bad credit is possible. Well, the answer is yes — if you want to know how to buy a house with poor credit, it’s still possible, though much more difficult now. However, the key thing is to spend a good deal of time researching all the various options you may end up encountering.

It may see like your case is hopeless and no financial institution will work with you, but this is not actually the case. Your options will be limited and may not be ideal, but they do exist. From credit cards to home loan financing, there is help available for people with a bad credit score.

Secured Credit Cards

If you have a history of not paying your bills on time, most credit card companies will not be willing to issue you a standard credit card. Many banks, however, do offer the option of a “secured” credit card. This simply means that you secure the card by depositing money in an untouchable account at that bank. That way, if you don’t pay your credit card bill on time, the bank is at no risk; it will simply use the funds you already have on account with them.

These cards can be a lifesaver for people who can’t get a credit card otherwise. Not only do they mean access to services that can only be secured using a Visa or Mastercard, but they also represent a way to repair your credit history. As long as you pay your new credit card bills on time, you will begin to look like a person who handles his personal finances well.

The disadvantage of using a secured credit card is that it is costly. Not only do you have to put money in the bank and leave it alone, you can expect to earn low or even no interest on that account. Even worse, a credit card for people with bad credit can have a high annual fee and a much higher than average interest rate. It’s in your best interest to get a standard credit card as soon as you have repaired your credit history enough to qualify.

Home Loans for People with Bad Credit

This presents a bigger challenge than does the credit card issue, but there are two major solutions out there:

• Veterans’ Administration Financing
• Owner Financing

Only veterans will qualify for VA financing plans, but if you have served in the United States armed forces and been honorably discharged, they are among your options. VA loans typically have low interest rates and easy terms, and with VA financing, it’s possible even for people with bad credit history to qualify for some kind of a loan.

Most people aren’t veterans, though. In that case, you may have to limit your home purchasing choices to those houses that offer owner financing. This means that the owner is willing to sell you the house on terms without any bank being involved at all.

Often, such homes would not qualify for a bank loan in any case. They may be old, or in need of serious repair. For example, the problem may be that the home needs one specific repair, such as a new roof, and the owner either can’t fund one, or for some reason chooses not to. It can all add up to you being able to purchase the home using owner financing and avoid the bank altogether.

This means that it should be easier than ever to buy a house, but unfortunately, the reverse is often true. The bad economy has forced many of us into making hard decisions that may have been right at the time, but ended up leaving black marks on our credit reports.

In order to take advantage of the great house prices now out there, the question often boils down to one issue:  how to buy a house with bad credit.

It may seem like the American dream is beyond your reach, but that’s probably because you don’t know that many ways actually exist to buy a house with bad credit. Here are the top ways that you should learn about and keep in mind as you are house shopping:

• Buy a Home with A Large Down payment and Bad Credit
• Buy a House with Owner Financing
• Buy a House Through Lease Option
• Buy a House with Lease Option with Conventional Financing
• Buy a House with a Cosigner
• Buy a House through a FHA Mortgage

But first, before we look at how to buy a house with bad credit, let’s first talk about how to qualify for a home loan because this is the BASIS for buying a home.

How to Ensure You Qualify for a Home Loan

1. Know Your Credit History

This is absolutely important. Your bank/mortgage lender will be looking at your credit history/score, so you should know exactly where you stand and what’s on your credit history. There are two ways you can check your credit: the fast and easy way, or the long way. Either way works.

You can check your credit score online (for free) or you can write a letter to all 3 major credit agencies and request your credit report t o be mailed to you. By the  terms of the Fair Credit Act, you can do so once a year.

2. Get a major credit card

If you have a credit card, great. If you are in the position of say a bankruptcy, it’s likely any of your previous credit cards will have been canceled. You can try applying for regular credit cards with your bank (or directly from VISA/Mastercard), but it’s my experience that these sources are unlikely to give you a credit card. Credit card companies are leery of risk these days.

Even if you have bad credit, it’s possible to still get a credit card. Why am I talking about this in a “how to get a house with bad credit” guide? Because fixing your credit is essential to getting any sort of loan with good terms. Credit cards are one of the best tools you have for repairing credit.

How to Get a Credit Card with Bad Credit:

Look for those “Mall/Grocery Store” Credit Cards

You’ve probably seen these type of credit cards. Usually there is an annoying salesman trying to hawk a store credit card to you just as you are trying to walk out of a store. Normally I would say “ignore”  these as the interest rates and terms offered on the card are dreadful, but if you have bad credit you are NOT in a position to be picky. Often these type of credit cards are given out more readily than regular credit cards.

Apply for a Bad Credit Credit Card

There are some online companies that will match you up with credit card providers willing to give credit cards to clients with bad credit. Of course, expect high interest rates on the card, but as  a temporary card to be used to repair your credit history, it’s fine.

Get a secured credit card

These are basically fully functional credit cards. But the credit you have on the card is determined by the deposit you pay on the card. You will usually pay 500 or 1000 dollars as a deposit on the card. That money will then be the “credit” limit on the card. In one year (or two years, depending on the financial institution), your deposit will be returned to you and the card converted into a non-secure credit card.

There is a BIG difference between a secured credit card and the “prepaid credit cards” you might see on online ads. Prepaid credit cards DO NOT repair your credit and you must pay a “fee” to put money on the prepaid card. Both prepaid credit cards and secured credit cards will work anywhere VISA/MASTERCARD is accepted, but between the two a Secured Credit Card is a real credit card while a prepaid credit card is not. Let me restate: a secured credit card is exactly the same as a normal credit card, the only exception being that your account balance is whatever deposit you’ve put down on the card. You must “repay” whatever you’ve charged on the card at the end of the month just like a regular credit card.

So if all the other options for getting a credit card fail, then this is the one to choose. We have found that secured credit cards are not as easy to get as you might think, however. A number of readers have told us that banks will still reject your application for a secured credit card.

So where to apply for a secured credit card with a reasonable chance of getting one?

You can apply for a secured visa card online here with Public Savings Bank (they specialize in online secured visa cards) or  you can go to your local bank to apply through your bank. Note that physical banks may reject your secured credit card application if your credit report shows you still currently owe money to people (i.e. your credit report doesn’t just have a low score but there there are marks saying you still have not paid debtors what you owe). If this is the case, your best bet is to apply for an online secured credit card as the credit check requirements are waived or just visit many different bank companies in person and apply and hope one will give you a secured credit card.

3. Never Ever Miss a Payment

If you are trying to repair your credit, the worst thing possible to do is to miss a payment of some sort. This could range from a credit card payment, phone bill, even a parking ticket. Anything that might lead to a negative mark on your credit must be avoided. Lenders want to see that you have a proven track record of paying your bills on time. This is also important because it leads up to our next point

4. Build “Non Traditional Credit History”

It’s true that mortgage lenders will look at your credit history, but they will also look at what’s called you’re “Payment History” (also called Non Traditional Credit History) too. Let’s go over this, since it is important.

First let’s give a definition of Non Traditional Credit history, or rather let’s let the government do it for us: In 2008, the Federal Housing Administration (FHA) put down a firm definition of non-traditional credit. Basically, non-traditional credit allows mortgage lenders to help establish a borrowers credit history through what you might call “non traditional means.”

This means that you can build a sort of ‘alternative credit history’ by making on-time payments to non-credit sources. The normal way to build credit are though “credit” sources such as credit card payments, car loan payments, mortgage loan payments, personal loan payments, etc.

However, Non Traditional Credit history can be build for some of the following sources:

• detailed payment history
• telephone bills
• utility bills
• cell phone bills
• cable TV bills
• local store credit cards

In short, paying your non-credit bills like cell phone bills, cable bills, utility bills can help you get a mortgage. Non traditional credit allows lenders to have an alternative means to determine loan worthiness. Note: this doesn’t mean you can just lax on your regular means of repairing and maintaining your credit (such as making loan repayments on time, credit card payments, etc), but if you have bad credit Non Traditional Credit can be a means to help you get a mortgage.

Note: you will need to keep a copy of all bills paid to prove your history.

5. Show regular employment for 1 to 2 years (preferably one job)

Mortgage lenders want to be certain that you can “pay” your mortgage. This is even more important now after the 2 year recession (some argue “depression”) that we’ve had. Lenders do not want to give out loans to someone who is likely to have problems repaying the home due to unsteady employment. It’s true that when the housing market in rising and rising, lenders are more willing to risk giving out home loans even to people who might not be able to pay the home off — if the person can’t pay, the home is foreclosed and the bank keeps the deposit paid AND can sell the house at a higher price.

6. Be able to show you earn wages or a salary

It’s not enough to show you have regular employment. You will also need to be able to prove you earn a wage. You might be able to show yourself as employed by your own company, but then your lender will want to see “how much you’ve made.” If you can show a steady salary over a couple years, you will be in a good position to get a mortgage loan, provided you have a down payment.

7. Save up a down payment of at least 10%

Having a down payment is highly recommended. Even if you have good credit, there is still a lot of benefits to putting down money on your home. For one, you lower the amount you owe on the home and thus bring down the interest amount you will pay. This saves a lot of money both in the short term and the long run. And secondly, having a down payment can help sway a lender to give you a mortgage loan, even if your credit history has been spotty over the years.

Now that we’ve given a list of things to do to improve your home loan qualifications, it’s also important to understand how important your credit score is and HOW it impacts what you pay for your mortgage.

Your FICO Score and It’s Effect on Your Mortgage

The relationship between your FICO score (i.e. credit score) is important to understand.

Now here’s what the difference between “good” and  “average” and “poor” credit really means for you, should you actually get a home loan. Here is a chart of the effect FICO scores have on your mortgage interest rates:

• 760 to 850  tier    5.780%
• 700-759      tier    6.002%
• 660-699       tier    6.286%
• 620-659       tier    7.096%
• 580-619       tier    8.583%
• 500-579      tier    9.494%

Anything below 620 is considered “subprime” in fact. This means you are basically going to take a big interest hike. Even subprime interest rates differ, with the lower your FICO score, the higher your interest rates. If you have a credit score at the lowest levels, your home loan interest rate may well be in the double digits. A credit score of say 700 and a credit score of 500 could mean hundreds of dollars more a month in loan payments.

When looking at fico scores and trying to calculate your mortgage payments, it can seem pretty confusing. But put it this way:

• If your FICO score is 500-579, you are going to pay about 4 points higher than the best interest rates for mortgage.
• If your FICO score is between 580-618, then your interest rate will be about 2.25 points higher than the best interest rates for a mortgage loan
• If your FICO score is btween 620-659, your interest rate will be around 1.5 points over the top mortgage rates
• If your FICO score is 700-759, your interest rate will only be about .25 of a point over the best rate possible
• If your FICO score is 760-850, you have the best interest rate possible

How to Buy a Home with Bad Credit

And finally we come to the guts of the article. Let’s talk about how you can actually buy a home with bad credit or no credit.

Buy a Home with A Large Down payment and Bad Credit

Ok first off, if you have poor credit, it’s still in the cards for you to be able to purchase a home. Getting a home with bad credit used to be a breeze until 2007 when the economy started to crash. The type of “bad credit mortgage loans” given out were called sub prime mortgages. These type of loans are no longer easy to get.

But just because you don’t have good credit, does NOT mean you can’t purchase a home. Now, if you have a large down payment, it’s very possible to “sway” your mortgage lender into giving you a home finance loan. The lower your credit, the higher the down payment you’ll need.

If you are trying to buy a home after bankruptcy or foreclosure, this is a good option. For those who have declared bankruptcy or had a foreclosure, you will have to wait at least 6 months before any hard money lenders will give out a loan.

How much of a down payment will you have to pay if you want to purchase a home with bad credit? You can expect  anywhere between 20% to 35% of the home’s value (I don’t give a definite because this changes). This is a hefty down payment to make indeed, but if you have bad credit but money saved up, it’s a sure way to get a mortgage loan. Note that the interest rate will be quite high (due to bad credit history) and your loan terms won’t be very favorable. There may be other penalties incurred as well.

Buy a House with Owner Financing

In general, it is banks and credit unions who pay a lot of attention to your credit history and FICO scores when you are trying to secure a mortgage.

Not all home loans require a bank to be involved, however. Some home sellers are willing to do what is called “owner financing.” This may sound like the owner is loaning you a sum of money, but what actually happens is that you agree on a purchase price with the house’s owner and set up a schedule for paying that purchase price over time.

This doesn’t mean that you won’t pay interest. The interest rate is one of the things that you will have to negotiate along with the purchase price. Most likely, you will pay a higher than average interest rate when you participate in an owner financing situation; this is because the house owner will be aware that you are probably working with him because you can’t get a bank loan. He’ll know that you are somewhat of a risk and increase the interest rate accordingly.

What he won’t usually do is actually check your credit record or ask the credit bureaus to supply your FICO score. As long as you can demonstrate steady, stable employment and an income stream that is sufficient to handle the payments you’ve arranged, the house owner will probably be satisfied that you’re not too much of a risk to take on.

After all, the risk on his end isn’t so very huge. If you fail to pay the loan, he will merely foreclose on you, which means he’ll get his house back and be able to sell it again. He’ll also probably be able to keep all the money you have paid for the house so far.

Owner financing used to be hard to find — most owners preferred for you to get a bank loan, since that way they would get the purchase price in full at once time. With owner financing, the owner will only be paid back over time, possibly as long as 30 years.

More and more owners are becoming willing to work directly with buyers in this market, though. That’s because of the dynamics of supply and demand. House prices are low because there are a lot more houses for sale than there are buyers at the present moment. Owners who want to sell are in the position now of having to compete for buyers by lowering prices and offering attractive terms. That includes the option of owner financing.

Pros of Owner Financing:

• Owners are more flexible than banks when it comes to arranging a payment schedule and loan terms. You might be able to arrange for an 18 year mortgage with an owner when banks will demand you agree to either 15 or 20, with nothing available in between.
• It may be the only type of financing you can get — without owner financing you would be locked out of the home market completely.
• Many types of bank fees are not involved in owner financing, so the overall cost of arranging the deal will be lower, sometimes much lower.

Cons of Owner Financing

• Some owners won’t do it, meaning that your choice of house will be more limited than it would have been with conventional financing.
• You will still have to come up with a down payment. Very few owners will agree to a zero down situation when they are assuming the loan risk for themselves.
• Your interest rate will probably be higher than you’d pay at a bank.
• A clear loan contract will be the responsibility of you and the owner, since no bank is involved. If the contract is not specific and clear enough, disputes could arise in the future about the purchase terms. This might snarl up your ability to fully assume title later and in the worst case scenario, could cause you to lose a home you’ve spent decades paying for.
• To avoid the problems listed above, it may be advisable to have a legal professional draw up the purchase agreement. This will add costs and possibly erase the “no bank fee” benefit you’ll get with owner financing.

Buy a House Through Lease Option

There are actually two methods to be examined in this category:

• Lease option with bank financing
• Lease option with owner financing

First let’s examine what a lease option is. A lease option refers to a special kind of rental contract in which you agree to rent a house for a period of time, most typically one or two years. During that period you pay rent just as would any tenant. However, in addition to your rent you pay a monthly fee that represents the “option to purchase.” This money builds up with the owner.

If at the end of your rental period, you decide to exercise your option to purchase, the owner must sell to you at the price and terms agreed years ago when you first became a tenant.  Additionally, the money you paid toward the option now is used for the house purchase. It usually becomes part of your down payment, though it may not fully fund it.

If at the end of your rental period you decide you do NOT want to purchase the house, you are not obligated to do so. You didn’t sign a “lease-purchase” agreement, after all. It was just a “lease option,” which means you retain the option of turning the house down. If you DO turn the house down, however, you will lose all the money you have paid for the option. This boils down to accepting that you have paid extra rent for all those months.

Pros of Buying a House with the Lease Option Method:

• The option can give you an automatic way to save up for your down payment.
• You have a year, maybe more, to get to know the house and its mechanical systems before you must make a final purchase decision. You should be able to evaluate the house very accurately compared to someone executing a purchase without ever living in the house, first.
• Your time as a rental gives you a year or two in which to repair your credit history. This may not matter very much if the lease option contract specifies that you will have owner financing at the end of the rental period. It might say, though, that you are expected to get a bank loan at that time. The lease option time delay makes it more likely that a bank loan will be available, assuming that you take steps during the interim to improve your credit rating.
• You are able to cancel the purchase if the housing market has declined. In other words, if while you rented, the house value has gone down, you won’t be forced to purchase it at the price agreed on one or two years ago. This can help you avoid getting into an “upside down” situation in which you are paying more for a house than it’s currently worth.
• In some cases, if the house value has declined, the owner will want to sell it enough to renegotiate the option and lower the price of the house.

Cons of Buying a House with the Lease Option Method:

• Some owners will want the option money paid in full up front before you begin to rent. This can pose a hardship.
• If you don’t want the house, you will lose your option money. This might total several thousand dollars.
• If you do want the house, but your lease option contract specifies bank financing and no bank will work with you at the end of the rental period, you will be unable to buy the house. This can be heartbreaking — you may have grown to really love that house while you were living in it.
• In the situation above, you will also lose your option payment. It won’t matter that you would like to exercise your option. If you can’t exercise it, for whatever reason, you will lose all the money you have paid in for the option.

Specifics about a Lease Option with Owner Financing

In this case, the lease option contract will also contain all clauses and language relating to the final purchase of the house, should the tenant choose to exercise his option.  This means that negotiating the lease option contract will be a complex and possibly very lengthy process.

Items that must be spelled out in advance include:

• Monthly rent, due date, and late penalties.
• What happens to the option if rent is not paid in a timely, consistent manner. After all, if you can’t pay your rent on time, the owner probably won’t want to do business with you for the life of a house purchase contract.
• Total price for the option.
• How the option will be paid to the owner (all in advance, or in monthly installments?)
• How the option will be applied to the house purchase, should it occur. In most cases the option is applied toward the down payment required.
• What happens to the option money if the tenant cancels the purchase. (Usually 100% of it is retained by the owner, but that’s negotiable)
• The total purchase price of the house.
• The amount of down payment that will be required in addition to any option money being applied.
• The interest rate attached to the outstanding balance of the loan.
• The amortization schedule for the loan.
• Payment due dates and late penalty fees.
• Whether arbitration must be used in case of any disputes.

If you are considering a lease option with owner financing, read the owner financing section of this guide again, since everything stated there applies equally well to this situation.

Buy a House with Lease Option with Conventional Financing

In this case the lease option contract will be simpler. It will specify most of what is listed above, but the actual terms of the loan will be up to the bank.

The lease option contract will need to state that you will get a bank loan when your rental period is over, and it will need to be specific about what window of time you have to arrange that without losing your option to purchase.

This will be an important point for the owner, because he probably won’t want to wait around for six months or a year while you arrange a loan. On the other hand,  banks move very slowly, so you want to make sure you give yourself enough time to finalize your loan so that you can achieve the American dream: owning your own home . . . even after having had problems with bad credit.

Buy a House with a Cosigner

A cosigner is someone who agrees to sign for your debt; in the event that you cannot pay, the cosigner assumes all responsibility.

It may be possible to get a mortgage if you have a cosigner to cosigner for the mortgage. Keep in mind (unless terms have changed since this article — always a possibility!) that the way mortgage lenders evaluate a mortgage application by two people (which is the case if you have a cosigner) is that they look at the individual with the lowest credit history and use that as as the determining FICO score. So if you have bad credit and the other party (the cosigner) has good credit, you still won’t be able to get a mortgage.

However, IF one party has NO credit history and the other party (the cosigner) has good credit, then the mortgage lender might use the cosigner’s credit history. So a cosigner mortgage is an option if you want to know how to buy a house with NO credit history. It’s always good that you talk directly to some mortgage lenders and pose the question to them directly, however.

Buy a House through a FHA Mortgage

The FHA mortgage is a government backed home loan. What’s unique about the FHA is that it is one of the only home loans where credit history is not the most important element. You can qualify for a FHA mortgage with lower credit history than other mortgages. Now credit history still is important.The FHA mortgage website recommends you have a credit score of 580 or more to be considered for an FHA mortgage loan. 580 would be considered “average” to “bad” credit. However, it is possible to still get a FHA mortgage loan with bad credit (credit score lower than 580). One highly popular national loan lender is LendingTree.com. You can check with LendingtTree to see if you qualify for a FHA loan.

There are two cases:

Case 1: You have a FICO score of 500 or more

If this is the case, you are eligible for FHA loan financing.

Case 2: You have a FICO score of less than 500

FHA does make allowances for applicants with non traditional credit history (remember this?). If you have insufficient credit but meet all other FHA requirements, then it’s still possible to qualify for a FHA home loan through your non traditional credit history.

Good Credit Options

You can buy a home with no down payment if you have good credit history. Now, keep in mind the housing rules are always changing and are HEAVLY depending on the housing market. But it’s always been a fact that you can secure an 100% unsecured mortgage loan with very good credit history. There worse the economy, the better the credit you will need. The idea is to get enough funding to cover the down payment while still keeping your interest rates at a good level.

Keep in mind though that just because you have good enough credit to get a home with no money down, does not necessarily mean you should in fact get a home with no money down. A down payment, should you have the money for one, can offer some significant advantages to you. Putting a down payment can qualify you for better interest rates and you save money over the long term because you owe less for the home and are thus being charge less interest on that home.

Bad Credit Options

You can still buy a home with no money down and bad credit. However, your choices will be pretty limited. Now, depending on how much money you make and just how bad your credit history really is, you may be able to get a traditional mortage with poor credit. If your credit is “bad” but not too bad and you make very good money, you may be able to make a compelling case to a lender for a no money down mortgage. You will need to explain why you have good credit. Keep in mind that telling them your bad credit is due to a gambling problem or irresponsible credit card spending won’t get you the mortgage.

One sure fire way to buy a home with zero money down and bad credit is to get a secured mortgage loan. However, you are going to need some significant assets like another mortgage that you can use as collateral. Keep in mind this is not “no money down” in the strictest sense because you are having to put up collateral. But you may be able to swing 100% mortgage financing like this.

Probably one of the most popular ways to get a mortgage loan with no money down is to seek out bad credit lenders for a no money down subprime mortgage home loan. However, these loans come with sky-high interest rates so you need to think whether such a loan is the best choice for you. Bad credit loans can be the perfect solution for some people though, if they make a lot of money and need to get a home quickly. If you consider bad credit mortgages to be an option, you should look around online and compare the different mortage lender offers out there. A bit of comparison shopping can save you a lot of money.

How to buy a house with no down payment? The short answer is through a lot of research. Follow the tips given in this article and do plenty of your own homework. You may be able to get that home of your dreams without having to put down money.

The number one thing you will need to get a no money down mortgage loan is good credit. In fact, not just good credit, but very good credit. A no money down housing loan is basically a 100% mortgage finance. You are essentially asking the bank or credit union to give you all of the money required to buy a home – both the down payment and rest of the mortgage. In better times, banks were willing to do this because they could offer a mortgage loan on a home with no money down and the value of the home would appreciate. If the borrower could not repay the loan, they could be evicted and the home could be resold for even more than the original value – thus yielding a profit for the banks.

That as then and this is not, however. The housing market has crashed so there is significant risk of a loss of money if you get a 100% mortgage loan from a bank and default. It’s very possible that the house will be worth even less than you paid for it. For this reason, banks are very picky about who they give no money down home loans to.

However, you still can get such loans. You will need good credit. If you have good credit and you make more than enough money to cover the mortgage cost, you can get a no money down home loan. There are also special home loan programs out there as well. For example, you can get a VA Mortgage loan. VA Loans are no money down loans that are backed by the government for people who have serviced in the armed forces. Now, most people may not qualify for this type of loan, but they are there for those who need them.

If you don’t have good credit, you are going to find it much harder to get a zero money down home loan. 0 money down loans with bad credit can only be had through bad credit lenders willing to risk such a loan. Keep in mind that as the borrower, you are going to pay heavily for that risk. Expect very high interest rates with a bad credit mortgage. You will need to spend time looking around online to find the cheapest bad credit home loan interest rates as well – so make sure you do comparison shopping on many different bad credit home loan offers you spot online.

Getting a no money down mortgage loan can make a lot of sense for some people. But before you think about such a loan, it’s important to decide whether such a loan is good for you. Remember, you are likely going to have to pay higher interest rates with no money down home loans and you will end up paying more money over the long run because you will owe more on your home.

The big question that’s on everyone’s lips is how to buy a home when your credit is bad. First, you still can buy a home if your credit is bad. Second, it’s no longer easy. In fact, it’s very difficult. It used to be that mortgage lenders were practically throwing mortgages at people who were woefully under qualified. We’re talking about people working minimum wage jobs, who have no credit, and who’ve never ever owned a single car getting a mortgage. The complete lack of financial regulation resulted in mortgage brokers engaging in predatory practices. And the result was the housing crash of 2008 and 2009.

In our present day (2010), if you want to easily qualify for a home mortgage, you are going to have to show several things now:

1. Good Credit
2. Firm record of steady employment
3. Deposit on Home

Unfortunately, most people don’t qualify with these three things. That makes it very tough indeed to quality for a home mortgage for the rest of us with bad credit. Mortgages for people with bad credit are no longer exactly easy to get.

But they can still be had. You’ll find the people willing to lend to you when your credit is bad significantly reduced. You can pretty much kiss any chance of securing a mortgage loan for a bank with bad credit – not unless you can explain away your bad credit and you have a very large deposit to throw down on the home. But, hope is not lost. There may be some online websites that specialize in bad credit – but you are going to have to meet some stringent quality assurance demands still.

Your best bet for getting a mortgage with bad credit is to actually repair your credit history. A tried and true tactic is spending a year or two repairing your less than stellar credit history while saving for a down payment. After a year or two, you may be in pretty good shape – both financially and credit history-wise – to start searching for a mortgage – and not a subprime mortgage but a regular one.

Before you can repair your credit history, you need to find out your credit score. Two ways to do this: the easy way and the long way. The easy way is to use one of the free credit check websites to obtain your credit score. The other option is to request your credit report be mailed to you. There are 3 credit agencies and each will have a credit file on you. You will need to request it from all three. You are entitled to one free report every year. Once you have your credit history at hand, you can start to fix it.

If you still don’t have very good credit, then you may want to consider looking for an online mortgage lender who does specialize in giving out a bad credit mortgage. It will be much easier to qualify for a mortgage loan from one of these firms than your local bank. But there are a few negatives to consider too.

1. Very high interest on subprime mortgages
2. Loan terms not friendly to the borrower
3. A Lot of Research

If you can live with the costs, then it’s worth pursuing a bad credit mortgage.