Bad Credit Home Loans are still possible to qualify for.

What is a bad credit home loan?

Ever since the mortgage melt down in 2007 people think it is no longer possible to get a home loan with bad credit. That is simply not the case however. While conventional mortgage loans require a credit score of 620-640, FHA Loans require a credit score of just 500. The FHA requirements state that a mortgage loan can be back by the government with 3.5% down if the borrower has a 580 credit score, and they allow for a 500 score with 10%. While it is much more difficult to qualify with a credit score of 500-579, it’s not impossible.bad credit home loans


When applying for a bad credit home loan make sure that you are able to explain your credit. Mortgage lenders want to know why your credit score is so low, and what have you done lately to help yourself financially. If you lost a job, or had medical bills that explain why you had a slip up on your credit profile then you are more likely to get approved. The lender want to see that you have recovered from the financial disaster that got you into trouble.

What are the FHA Loan guidelines?

The credit score requirements for an FHA home loan purchase is 580, with a required FHA downpayment of 3.5%. While a 580 credit score is the minimum score set by the Federal Housing Administration, Mortgage companies can, and do set their own credit score requirements. Many banks require a 620 to 650 credit score for all loan products.

To obtain an bad credit home loans through the FHA. You must be buying the home to live in (self occupying). Known as owner occupied homes. If you intend on renting out the property, or flip the home as an investor you will not be able to qualify for FHA Loans.

DTI – Debt to Income – The amount you will qualify for a mortgage loan.

Your total monthly income minus your monthly payment obligations. Such as credit card payments, car payments, personal loans, etc. Typically for FHA Loans the maximum DTI is 41-43%.

Example: You make $5,000 a month. You have a car payment of $500 a month, $300 a month in minimum credit card payments, and $200 a month in student loans. This is a total of $1000 in monthly debt. You now have $4,000 per month to work with. You would likely be approved for $140,000.

Speak with one of lenders to see what you qualify for today