Qualifying for a home loan with poor credit used to create a difficult situation for home buyers. Even today, some lenders will not consider an applicant with a credit score less than 650. As a group, the majority of mortgage lenders are adaptable. For example, in more recent years, FHA guidelines have become less rigid, wherein bad credit applicants have a better chance of getting a loan approval.

If you have bad credit, plenty of things can multiply your chances of approval. Apparent solutions include paying bills, collection accounts, charge-offs, and debt reduction. Then again, home buyers can also do research and learn explicit steps that can accelerate the process.

1. Select a Good Home Loan Program

Fannie Mae’s “Timely Payment Rewards” Loan is perfect for home buyers with poor credit. This loan program is purposed for people with past or current credit problems. Initially, the home loan rate is high. However, if the borrower makes timely payments for 24 consecutive months without a delinquency, they qualify for a 1% rate reduction.

2. Explain Credit Situation

If uncontrollable circumstances contributed to bad credit, some mortgage lenders will acknowledge a written explanation. This provision accommodates home buyers with a previous history of good credit. Acceptable reasons might include employment loss, temporary disability, serious illness, etc. Written explanations must be accompanied with sufficient evidence (medical bills, unemployment pays stubs, etc).

3. Research Mortgage Loan Requirements

Several months before buying a home, bad credit applicants should contact multiple lenders and inquire about mortgage requirements. Credit score minimums vary according to loan program. For instance, some financial institutions will categorize an applicant as sub prime if their credit score is less than 650.

4. Meet with a Financial Consultant

Nearly all bad credit is attributed to poor money management. Prior to submitting a loan application, briefly meet with an expert. After reviewing your assets, credit, and debts, a financial consultant can offer insightful advice, and create a plan that will help you improve your credit and purchase a home.

5. Don’t Defer Credit Improvements

Even if you take measures to better your credit (pay off debts, correct credit inaccuracies, etc), it can take up to 45 days for changes to show on your report credit.