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Can I Be A Home Buyer Even With Bad Credit?

Let’s face it. In today’s economy many of us have credit issues at some point in our life. It could stem from anything from an unforeseen illness to the loss of a job. The turbulent economy hasn’t helped.

Many of may have once had a perfect credit history but now there may be late payments on loans or utilities that simply couldn’t be helped. You may think that you have to have perfect credit in order to qualify for a loan to buy a home, but this isn’t always the case. There are various loan programs available to you that may allow you to have less than perfect, or even what many would consider “bad,” credit to qualify. This is where having a good Realtor helping you is important, because the agent should know the various programs available, including some of the newer programs that have recently come about to help those in need purchase a home.

There usually are a few new or limited programs available for home buyers with imperfect credit; many are according to the area you are looking to purchase the home in. Some programs qualify particular areas, certain cities, special rural markets, and even some particular states that offer programs to lure home buyers. Other programs may have been in place for years but simply don’t get the attention others get because they’re not “main stream” or may not have been a program that was “needed” before turbulent economic times. Again, any qualified and worthy realtor will be knowledgeable about different programs that may be available to help with funding your dream of owning a home.

Federal Funding

There are Federal funded loans that are more lenient on home buyers with less than perfect credit. The Federal Housing Administration has been in place since the 1930’s and offers various programs that require low down payments, easy credit qualifying, and low closing costs. Some of these programs have been around for a long time while others may have been recently introduced to entice home buyers in the current economy.

Again, the easy credit qualifying allows those with imperfect credit to still qualify; many times with a simple letter explaining the credit issues that other lenders see as a red flag that wouldn’t allow you to normally qualify. Other times the issues that other lenders may see as a problem aren’t really an issue with some of the Federally Funded Loans. They offer special programs for first time home buyers which allow for lower down payments and can include the closing costs in the loan itself, making it even easier to get a loan with even less money up front.

They also offer special “fixer-upper” loans on homes that other banks or lenders may not qualify the home for due to the fact that it is in need of repair. These Federally funded loans often allow the extra costs of the home repairs to be rolled into the loan itself, creating an amazing opportunity for the handy-man types to qualify for a loan on a home that normally wouldn’t pass “normal” lender qualifications.

FHA is one of the few lenders that offer special loans exclusively for mobile or manufactured homes, along with land for the homes to be placed on. These are normally hard loans to get from typical banks and lenders, but especially so if you have any credit issues.

They also offer special loan inclusions for energy efficiency remodeling to be added into the total loan amount. These include green methods of lighting, heating and any energy efficient additions you may want to add to your home. Of course there are certain qualifying aspects and, again, your real estate agent can either help you or guide you to the proper sources to guide you.

State Programs

Each state is different and may offer state specific types of programs that would be relevant to the state itself. For example, Florida offers a Homeownership Voucher program where public housing agencies offer help with a voucher system called the Housing Choice Voucher Homeownership Program.
Some states offer agencies that can help you in various situations, including counseling you with making financial decisions and guiding you along the way to find the program that your particular state may offer that fits you perfectly. Again, a qualified real estate agent should be able to point you in the right direction to these types of agencies that can offer special programs or counseling regarding your financial situation and buying a home.

The End Result

What it basically comes down to is that there is hope for those who have less than perfect credit or can’t qualify for typical bank and lender loans. Programs have recently been added to help people find their niche in the financial market that they fit in and can be approved for without having to be rich and perfect in every way with their finances.

Yes, it does still matter that you have some credibility that proves to the lender that you will pay your mortgage properly; but there are also realistic options that show the lender understands we can’t always be perfect. Check with your Realtor to see what programs they know about or they can guide you to a financial advisor who specializes in obtaining loans for people with less than perfect credit.


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