How to Get a Bad-Credit Mortgage Loan

Purchasing a home is one of the most expensive investments that most people in the United States, even those with perfect credit, ever make. It typically involves taking on a mortgage loan for some or most of the home's purchase price, which can cost tens of thousands of dollars in interest over the life of the loan. If you have bad credit, you will likely end up paying more for the privilege of borrowing money than a borrower with a high credit score. You might also find it difficult to convince a lender to approve you for a mortgage; however, certain strategies may help you secure a mortgage loan.

Instructions

1

Order your credit report from Experian, TransUnion and Equifax to find negative items that impact your credit score. Also, obtain your FICO score to determine how mortgage lenders will view your creditworthiness.

2

Review your credit report for inaccuracies. If you spot an error on a credit report, send a letter to the reporting bureau requesting an investigation. If the credit bureau determines that an item was incorrectly reported, it will remove the item, which may raise your FICO score.

3

Save money for a down payment on a mortgage. Although mortgage lenders commonly offer mortgages to customers with high credit scores for little or no money down, getting a bad-credit mortgage may require a down payment of up to 20 percent of the purchase price.

4

Contact lenders in your area to find out if they offer mortgage loans to people with poor credit scores. Some traditional lenders offer programs to help credit-challenged customers obtain mortgage loans.

5

Search online for mortgage lenders that provide bad-credit mortgage loans in your state. Check with the Better Business Bureau before committing to a mortgage loan with an online lender to ensure that the company is reputable and treats customers fairly.

6

Find a person with a high credit score, preferably 700 or higher, to co-sign your mortgage loan. Traditional mortgage lenders sometimes approve co-signed loans that they would not otherwise provide for customers with bad credit.