Get a Loan, Even With Bad Credit

If your credit score isn't in great shape, you probably know already that getting loans is sometimes difficult – and when you do get them, they don't always have the greatest terms and interest rates. Dealing with mortgage loans, in particular, can be tricky for those with bad credit, since an inflated interest rate can add up to quite a large chunk of extra change considering the size and lifespan of the loan. Thankfully, there are a few options out there that are designed to help those with bad credit get a loan without losing everything in their wallets. One of the most common and useful is an FHA home loan.

FHA Loans: What Are They?

FHA loans are based on a program laid out by the United States government. The country's economy can suffer when not many people are buying homes, so in an effort to help improve overall financial health, FHA loans are sometimes offered in order to get more people, even those with bad credit, into the mortgage market.

• The primary feature of an FHA loan is that it's much more forgiving of bad credit than typical mortgages.
• Those with low scores can apply and not suffer the large penalties their scores would produce from a typical lender.
• Past bad credit, typically anything older than two years, can be virtually ignored, provided you've made a recent attempt to clean things up and reduce your debt.
• A very small percentage of the total cost as a down payment is also expected, in acknowledgment of the fact that many people with bad credit don't have lots of cash lying around in lump sums.

In general, an FHA loan is a viable option for you if you've avoided foreclosures and bankruptcies for the past two to three years. You must also pay off any accounts that are deep into collections or are producing judgments against you. Once these requirements are met, FHA lenders will probably be willing to work with you.

Getting Help

There are multiple options for those with bad credit who want to get home loans, and not all of them are through the government and FHA. Looking into FHA regulations and seeing if you qualify is a great place to start, simply because the program is reliable and flexible and has a verifiable history of helping people in situations similar to yours. Getting a mortgage loan with bad credit is not impossible, and it doesn't have to bleed you dry, either. However, you should have a qualified real estate attorney look over the paperwork on any loan you are considering to make sure the terms and conditions are fair and that no hidden costs or fees will cause you problems down the road.