Mortgage with Bad Credit History

Mortgage lending companies are generally more sophisticated than individuals who lease homes. More money is involved. Qualifying loans (i.e. Fannie Mae, Freddie Mac) require government approval. An application reflecting mortgage bad credit history will not prevent approval, but rather, generally affects only the amount of the down payment. For government approval, a mortgage bad credit history is generally considered to be a FICO score of less than 620. A mortgage bad credit history probably requires more than 10% down, with almost everyone qualifyies at 20% down in all but the most extreme circumstances.

Disclosure of a mortgage bad credit history

Because of the wide availability of credit checks, background checks and asset searches for extremely low costs, almost all commercial lenders access these records online. A mortgage bad credit history will be discovered in a matter of seconds. You cannot hide a prior mortgage bad credit history. The best approach for all applicants is to minimize the surprise explaining your situation before a credit check. This way, surprise dissipates and you build credibility which increases your potential for approval.

What if my recent credit is terrible?

Almost all mortgage lenders offer low documentation loans. When paying 30% down, credit checks are usually not required, or financial statements, nor many of the ordinary disclosures. These special loans are designed to quickly approve loans despite a prior mortgage bad credit history. Because collateral rather than documentation is the sole basis approval, a mortgage bad credit history including a recent Chapter 7 discharge is virtually irrelevant.