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Kristin Said:

What is a good way to get a mortgage loan for a first time home buyer with bad credit?

We Answered:

There may be financing for you but a lot will depend on just how low your credit score is and how much money you have to put down.

Mortgage lending decisions are based upon "perceived risk". Most lenders use an automated underwriting system developed by either FNMA (Fannie Mae) or FHLMC (Freddie mac). These systems are score driven and make it difficult to get approval on a low down payment loan with low credit scores.

If your score is below 600, you may need to use a sub-prime lender. Traditionally, their rates are much higher and may have pre-payment penalties on the loans which tie you to that loan for a 2 - 3 year period.

Congratulations for taking the first step and paying off all of the delinquent loans. You are on the road to good credit again. Each month your credit score will improve now as long as you keep making your payments on time.

My best recommendation to you is to start putting away as much money a month as possible. The more money you can put down as a down payment, the more favorable loan you will qualify for. If you can delay your purchase for a year, you may well be able to qualify for "A" level financing. A year isn't a long time and now you have a goal to work towards.

Good luck.

Eleanor Said:

We have been preapproved for a home loan but were late on a credit card payment...is this bad?

We Answered:

Many credit card companies will only report a late payment if the account gets more than 60 or 90 days past due. Missing a payment may not kill your credit. I would contact your credit card company and ask them not the report the late payment; you may find that they are happy to oblidge. Remember, they are making a lot of money on the late payment, and they don't have incentive to trash your credit.

Tamara Said:

how bad can your credit be and get a home loan?

We Answered:

350 is the lowest score you can do with FHA mortgages.

YOU CANT HAVE ANY CREDIT LATES IN THE LAST 12 MONTHS....and you will need 2.25% down payment