There are home loans available for people with low credit scores. Please remember that a low credit score changes with the economic times, and what was a low credit score a few years ago may be disqualifying now. In our current economic environment, traditional loans for people with low scores are limited, but there are creative ways to get a mortgage with some effort and education.
The best way to obtain a traditional home loan if you have a low credit score is to look into an FHA loan (or VA loan if you are a veteran). There are loans that can be obtained from private investors that will come with an extraordinarily high interest rate as they would take on the high risk of someone that does not have the financial credit to obtain a traditional loan.
There are people who are willing to owner finance. The interest rate will be higher depending on the amount of your down payment, if any, and your credit history. Many people think these loans don’t exist and that an industry has been created to make people think they can do this when they can’t. You can. I’ve done it. You have to become educated on the process and follow a strict plan so as to limit your risk. More on this is coming.
You can rent to own, where a portion of your rent goes into an escrow account to be used as a down payment on the property, whether it is to be used as an owner finance or through a traditional bank. You can claim a portion of your income from a rental if you buy a two family house and are planning to rent one side. This would help if you didn’t have the income necessary to obtain the mortgage and may help offset a low credit score.
The point is that having a low credit score, especially in today’s economic environment, makes it difficult to get a mortgage…but not impossible. Anything can be accomplished through hard work, perseverance and creativity.