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How To Get A Mortgage When You Have Bad Credit

It can be a pain: A poor credit score makes it tougher to get approved for credit cards and loans. 800 or higher: Exceptional 740-799: Very good 670-739: Good 580-669: Fair 579 or lower: Very poor Experian notes that those who fall into the “fair” range are considered to be subprime borrowers. Different lenders have different underwriting standards, and credit scores can play a bigger or smaller role in your overall approval chances depending on other factors, such as income, assets and the property you’re financing. “This means that you may have to go through private lending or mortgage brokers and not your local bank.” Soares noted that with mortgages through private lenders (which include individual investors and “hard money” lenders that often finance individual properties), the interest rate for a borrower with bad credit will be higher and the minimum down payment will likely be heftier. Here’s a look at what else you can do to get approved for a mortgage with bad credit. If your score is lower than that, you’ll be required to put at least 10 percent down. According to Courtines, VA mortgage lenders typically require a credit score of at least 620, but it is possible to find some that will accept a 580. VA loans don’t require a down payment, but you do have to pay a funding fee, typically 2.15 percent of the loan value. The lower your DTI, the better, since you’ll have more income available to handle a mortgage payment. Usually, lenders require a DTI of 43 percent or less, though 36 percent is ideal.