Does bad credit automatically disqualify you from purchasing a home or obtaining a mortgage? Not necessarily. If you have bad credit, it may be more costly for you to buy a home compared to someone with good credit, but it is possible.
Many people have less than perfect credit. While buyers with low credit scores have fewer options to choose from, government mortgage programs such as FHA and VA loans are excellent options to consider.
An FHA loan is a mortgage insured by the federal government and administered by participating lenders – and its relaxed credit guidelines permit loan approval despite low credit scores. FHA loans require only small down payments, so if you are short on cash and have a marginal credit score, FHA loans can be very attractive.
If you are a qualified veteran, a “VA loan” is another excellent choice.
Many state and local mortgage programs are also available to help people with bad credit get approved for mortgages. Check with your local housing authority for more information.