Buying a Home When You Have Bad Credit


If you’re planning to purchase a home, you’re almost certainly going to need to get a mortgage—that is, unless you are able to pay for the whole thing in cash. And if you do get a mortgage, you’re first going to need to impress a mortgage lender.

Lenders want to make sure they have a real shot at making back the money they loan you (and then some). They want to minimize their risk. This means they are going to look closely at your financial history before deciding whether or not to lend you money—and what they want to see is that you have a solid credit history with minimal debt. The better your financial history looks, the more likely you are to secure a loan with good interest rates.

But what if your credit isn’t so good? Well, you may have a harder time getting a loan, or at the very least you might have a worse time with interest rates.

Ways to Get a Mortgage—Even with Bad Credit

This does not mean that it’s impossible for those with subpar credit to get a mortgage, though. Consider some of these suggestions to improve your mortgage eligibility.

  • Verify your credit. Check your credit score to see if it’s really as bad as you assume it is. Your credit score will be a number between 300 and 850, and anything above 700 is perfectly fine. Below that is where you may have issues getting good mortgage rates.
  • Check your credit score for errors. Go over it with a fine-toothed comb. Credit errors are made all the time—one in four Americans deal with one at some point in their life—and if you find an error, you should report it and have it stricken from your record.
  • Look into different mortgage products. Speak with your lender about FHA loans, which you can get with credit scores as low as 580, and with a down payment of just 3.5 percent. Be warned that you will likely need to buy private mortgage insurance, though. And there may be other loans that your lender can tell you about, which can help you get a loan even with suboptimal credit.
  • Take some time to improve your credit score! Pay off old debts, and make sure you’re handling all your bills in a timely manner. Also, avoid opening any new lines of credit or making any really big purchases for a while, if at all possible.

Find a Mortgage—and a Home

Ultimately, there are usually ways to get a good mortgage, even if your credit history isn’t what you’d hope for—and for that matter, there are usually ways to make your credit score improve.

Minges Cline can refer you to local North Carolina lenders, and from there we can help you shop for homes in your price range. Give us a call today to start seeking your new North Carolina home!