Is it possible to buy a house if you have horrible credit?

Question

I have very bad credit. I am soo tired of renting. I want to try and finance a house. Is there any way possible to do so without a huge down payment. I have never owned a house before. Everyone tells me there are first time buyer programs.

Answer 1

Not any more the subprime market has been shut down, the Alt-A (those between subprime and prime) has been shut down, and now the prime are having problems, this is only going to get worse. There might be first time buyer programs, but will depend on your credit and credit right now is very tight, and getting tighter. Read the business news to see what is going on in the market.

Answer 2

Let me get this straight...

You're asking if anyone will lend someone money who has proven in the past he doesn't pay it back.

Actually, you're asking the wrong question. What you should be asking is what steps should you take to improve your credit so that you will be in a position to purchase a home. Nobody with bad credit solves anything by taking on more credit, like purchasing a home. Lower your expenses. Get a second job. Work on paying your debt down. Pay your bills on time. And then you will be ready to purchase a home.

"I'm tired of paying rent" is a bad reason to purchase a home, because a home payment is usually more and always includes additional expenses, like all the utilities, expensive taxes, mandatory homeowner's insurance, mortgage insurance (I'm assuming you have no money saved), unexpected repairs, little things like shower curtains, closet rods, and drapes, and I could go on and on and on...

Purchasing a home neither addresses your real problem, nor sounds like a good idea for you.

Oh, and mortgage insurance is only an option for people with good credit. If your credit score is below 620, the mortgage insurance will be very expensive. Below 580, it is generally unavailable unless you've put at least 5% down. Even then, it's very, very expensive - like the same as your mortgage payment each month.

Answer 3

Jodi,

Sarah W had a good answer.....your best bet is to find a lease to own option. I'll explain to you because I didn't understand how this works but this is what you want to look for.....

Say someone has in the paper Lease to own option!

You love the house- It is a good price example (not sure what state you are in) $85,000 for a 3/1 single family home.

You would be asked to put down about $5,000. This is NOT a deposit. You would never get this back. This will, however go toward the future purchase of the home. You are asked to pay $900 in rent, with an agreement that 100 a month goes toward the purchase of the home and sign a contract that you can buy in 2 years......This is a Wonderful deal! You are actually working on the purchase of this home, investing your money-and in 2 years can work on your credit to get it to where you would like it to be to get a better loan. Most people don't think of this option, but it is a wonderful one! Hope this helps! Take care and God Bless! Michele

Answer 4

it first depends on what you think bad credit is. If your scores are in the 400's and you have all derog atory credit, then you will need 30% down at least. However, if yu just have credit lates, on say some credit cards, and minimal credit in addition, you can use altermnative trades to show payment history. If your renting and the rent is on time thats one. If you have cable and auto insurance paid on time, thats two more alternative trades. public service counts also. FHA go to www.hud.gov has great programs at 0% down f this fits you. There are non-profit gifting agencies like Nehemiah (go to getdownpayment.com) that will give you 3% down. If you are in Colorado i can help you.

Answer 5

one first time buyer programs really only for people with the credit. there are really two ways to buy a house with bad credit. First one is with at least 20% down and the other is to do a private mortage (seller fiancing) or lease/rent to own

Answer 6

I do rent-to-own's with my buyers. 5% + 1st month moves you in. When your lease time is up (usually 3 years) and you refinance into your own name, you get your 5% back + 50% of any appreciation that's occurred. You also get to take the mortgage interest deduction on your taxes (huge benefit) during the whole time you're living in the house.

Contact me if this would interest you. I'm associated with a nationwide network of investors, so if you're not in my area, we still may be able to find you a house.

Answer 7

The best way to go about it is to try and clean up your credit first. If that is not a viable option, there are loans and companies that provide loans specifically for people with bad credit. You will have a much higher interest rate than someone with better credit, but it can be done.

Answer 8

With lenders going outta business left and right, lending requirements have become extremely tight. Even people with decent credit are having a hard time getting approved!

There's not a huge pool of money to lend out to buyers, and so they're being extra cautious who they lend to. Your chances are very slim with the way the market is right now. Even if someone was willing to lend to you, your rate will be incredibly high.

Answer 9

A couple of tips for you:

Go to more than one bank. Just because banks 1 and 2 turn you down, doesn't mean bank 12 will.

One key thing to do with multiple lenders is to only have the first on run your credit, then ask him/her for your credit score. When you have other lenders run your numbers, just tell them what your credit score. Why? Everytime your credit is checked by a lending institution your score is lowered by 3-7 points for 90 days, then those points are restored to your score.

Answer 10

Jodie, but the glory days are over. Nowadays you need to have really good credit score, 600 or higher, some cash and good credit history. First time buyers programs are for folks who have managed thier money, have good credit score and history.