The Best Home Financing Options for People with Bad Credit

It is common knowledge that people with poor credit ratings find it hard, if not impossible, to get approval for home financing or loans. Even if you have just filed bankruptcy, you still have many chances of being approved for home financing. You might have relied on banks and traditional methods of home financing that lay strict rules when it comes to credit evaluation and loan approval. There are many home financing options for people with bad credit that you can consider if your credit score is not favorable. With good research and patience, you can find lenders who offer financing programs that are suitable for people with poor credit ratings. You can succeed in finding a bank that can offer you a financing, but you will need to pay a down payment that can be between 25 to 50 per cent of the total cost. This can be very challenging especially if you are going through difficult financial moments. You can choose an alternative financing program from the options discussed below.

You can use bankruptcy to your advantage when looking for home loans. The good thing about filing for bankruptcy is that you have the possibility of making a new start. Lenders will hardly associate you with debt especially if you improve your credit score by consistently and regularly paying your bills. After bankruptcy, if you succeed in getting a job that gives you regular income and that allows you to save at least 10 per cent of the down payment, then you can easily get home financing from a traditional loan program. You can get a loan from some lenders 6 months after bankruptcy. You can also use a seller financing for a new home. With the seller financing, you will have the advantage of no credit checks, fast deal closing, low interest rates and flexible payments.

You can also get a co-signer loan if you have poor credit ratings. In this type of loan, the interest rate and the loan approval are determined by the credit score of the co-signer who should either be a close relative or a partner. Self-employed persons and professionals who are just starting their career with low income can also consider the interest-only loan programs. Interest-only loans allow you to pay only the interest on the loan until you have a regular income to start settling the principal. You can also consider the Federal Housing Administration loan programs. These are government sponsored programs that offer loans to home buyers with very low interest. They do not take credit ratings into account as long as you have a regular income that can ensure consistent payment.