Having bad credit doesn’t always mean that you won’t be able to buy your own home. It is true though that a lot of lenders will not be willing to write you up a conventional type of mortgage if you have bad credit. You can try and get an FHA or a VA home loan instead of going with a traditional lender. Once you qualify for either one of these an approval for a home loan is basically assured, although it may not be right away. It all depends upon the state in which you live so it could take a few years to qualify.
The Fede4ral Housing Authority has been around since 1935 and have been helping millions of Americans that have past credit problems as well as limited incomes to get homes. The VA has been do the same thing since 1944 when they created the GI Bill. Both of these organizations have flexible credit policies and are include home buyers who have shown a consistent patterns of being responsibly financially even if they have bad credit from their past. The standards for qualifying with both the FHA and VA are pretty much the same with just a few minor differences. If their criteria are met then they will both guarantee the buyer home loans, this even includes those who may have very small down payments or none at all.
In order to qualify you will need a credit score of 580 or higher and you should have no more than one bill that has been 30 days late in the past two years. Your bills need to be current and most of them need to be paid on time for one to two straight years. The FHA policy is to make sure there is an overall pattern of handling of credit responsibly, so if there are any infrequent lapses this won’t disqualify you. One of the most important things is that you have some sort of proof that you have paid your current rent on time for the past year. You will need to provide them with your landlords name, address and phone number.
If you have never had credit this would mean then that the FHA and the VA both would simply waive the credit score requirement. They will accept records of rent, utilities and phone bills for the last year instead of any credit payment statements. If you have had bankruptcy you will be considered if you can show you have had a clean record for two to three years after the bankruptcy.
You will also need to have steady work history for the last two years, and with a stable income that appears to be stable. There is a limit set down by the FHA with regard to the mortgage payments being no more than 30% of your gross income. You need to show how much you make so they can figure out how much they think that you can afford. You will need to either show them your tax returns or your W-2 forms for the past two years and if self-employed you will need some sort of tax paperwork for the past three years.
In order to meet the eligibility requirements for a VA loan you need to have only served 181 days or just 90 days if in wartime and must not have a dishonorable discharge. You need to fill out the VA form 26-1880 and provide them with your DD-214 or military discharge papers. Their requirements are pretty much the same except their limit is 41% of your gross income can be used in paying bills and a mortgage.