You would have to live in a hut in the woods to not understand that the mortgage market has made some serious changes in the last few years.  There were once options out there for just about every situation.  Bad credit wasn’t an issue thanks to the subprime market. (Especially if you had some sort of down payment.) If you couldn’t verify your income, no problem!  Just get a stated income loan.  Can’t verify you job – no worries!  Just get a No-Doc loan.  Yes, you would pay a little more interest but that was better than committing mortgage fraud or not getting a house at all.  In today’s market, getting a home mortgage loan with bad credit is all but impossible.

Three keys to success

Restore Credit

If your credit score is below a 620, you will need to take some time and work to improve your score.   You can hire a credit repair company, but a better option is to learn credit restoration.

Document Income and Employment

Because stated income and no-doc loans are no longer available, you will need to be able to verify your income and employment if you want to qualify for a loan.  This means that if you are self employed, you will need to be able to provide two years of self-employed tax returns that show you have the means to make your mortgage payment.

Down Payment

Like stated income loans, 100% financing loans are gone.  To make matters worse, the down payment assistance programs that were once so popular have disappeared as well.  This means that regardless of how good your credit is, you will need to save up some sort of down payment.  At a minimum, FHA loans require a 3% down payment.  Conventional financing requirements are even higher at 5%.