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First Time Home Buyer Loans for People with Bad Credit

 

first time home buyer loans bad creditWhat exactly is bad credit? Let's start with the lower end of generally accepted credit scores* for borrowers. If your credit score sits below the 600 mark, you'll have a difficult time getting a first time home buyer loan. As you inch towards a 620 FICO score, your "borrower risk" begins to fall in the eyes of most lenders. 640 and above and you're getting into the safe zone for most loan options. So, what does this mean for people with bad credit? It means it's time to work on bringing that FICO credit score up, up, up. 

First, you need to understand there's no quick-fix to credit problems. Regardless of the reason (and we all have valid, real reasons when it comes to credit history hiccups), a low score is seen as a risk to lenders. The only real thing that will lower that risk is time and effort, which will show that you're a responsible consumer who pays his or her bills.

Also, understand that a bankruptcy, a foreclosure or a short sale in your recent history will affect your credit score and your chances and finding any kind of first time home buyer loans. A short sale will keep you from getting a mortgage for 3 years. Bankruptcy: 2 years from the discharge date (depending on some factors). 

Now, let's look at how you can begin to repair that credit. Two of the biggest steps are A) paying your bills on time and B) bringing your balances down. As far as paying bills on time, this goes for all of your bills, every month, for a year. This is where patience comes into play. Next, your balances. Credit card balances should not exceed 30% of the limit. In other words a $10,000 limit credit card should have less than $3,000 charged on it. Read more about repairing your credit in the article First Time Home Buyers and Credit: 6 Mistakes to Avoid.

The bottom line is that you won't find any magic first time home buyer loans for borrowers with bad credit. It takes patience and effort. Want to learn more about getting your credit mortgage ready? Download "The Road to Mortgage-Ready Credit" at the button below. The free eBook walks you through the factors that make up your credit score, ways to protect yourself and other information. Get your copy today!

download-the-credit-ebook

(bad credit: Flickr user Natloans

*these numbers are not intended to be hard and fast numbers, as loan programs do not generally have minimum credit scores, and they are to be used as a guideline

Comments

Hi, I am trying to buy a home, my credit is poor due to identity theft, which I have been working on. 
However, I am paying 1250 a month in rent and I am thinking this is crazy. 
I found a house did the figures, (on the high end) and found I would save over $400 a month by being a home owner. I want to know if there is a way that I could get a loan?
Posted @ Thursday, August 09, 2012 1:12 PM by Kathleen Donohoe
Kathleen, 
Your chances of getting into a mortgage loan all depend on that credit score and your income. It would be best to talk to a mortgage consultant in your area. Identity theft is tough, and there may be something a mortgage pro can do for your particular situation. I'll email you for details!
Posted @ Saturday, August 11, 2012 7:17 PM by Dan Moyle
I'd like info on how I could maybe purchase & clear
Posted @ Thursday, November 08, 2012 7:50 PM by rob smith
Hi there Rob. We'll shoot you an email and see how we can help! 
Dan Moyle 
AmeriFirst Home Mortgage/Marketing
Posted @ Friday, November 09, 2012 7:12 AM by Dan Moyle
I just recently got a copy of my credit score and it doesn't speak much volume to make me eligible to purchase a home for the first time. Although my credit score is in the HIGH RISK chart, will my monthly income suffice to assist with loaners to approve me?
Posted @ Friday, December 14, 2012 1:03 PM by Jay
Home prices keeps on moving ups & downs depending on how the entire economy works.
Posted @ Sunday, October 06, 2013 11:49 PM by Ted at insurance
My wife died in August 2012, and my daughters and I got her house because there was no will to leave it to anyone else. The house is paid for except that Linda hasn't paid the taxes on the property for the last 2 or 3 years so we decided to sell to pay the back taxes. Now it seems a better idea for me to borrow enough to pay the taxes and my daughters, and keep the house. I need to know what steps to take to obtain the $40,000 I need to achieve this goal. I have poor credit, and work seasonally from March to October basically, but there are other factors that can be applied. Please help if you can. Thanks
Posted @ Saturday, January 04, 2014 7:41 PM by Edward G Darrow
Edward, 
Mortgage loans don't typically cover things like back taxes. What I would suggest though is to talk to one of our mortgage consultants near you. Here is our office locator where you can find a branch close to you: http://www.amerifirst.com/office-locator/ 
 
A mortgage consultant should be able to help you go over your options. 
 
Thank you.
Posted @ Saturday, January 04, 2014 9:44 PM by Dan Moyle
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