Apply for a Home Loan with Bad Credit

Mortgage Newsletter
Privacy Policy

Check Local Mortgage Rates

Today's Average 0.00%



Loan Program Choices

Use our calculator to find out your estimated monthly payment in advance: Enter the loan amount, interest rate, and length of mortgage.
Try our Mortgage Payment Calculator


When you try to apply for a home loan with bad credit, you might feel like the whole world is against you. You think none of the banks want to do business with you and you will never get the house that you've always wanted. Your bad credit can definitely hurt you. However, it is not impossible to get accepted with bad credit. Here are a few things that you can expect, though.

It Won't Be Easy

When you have bad credit, you can expect things to be a little more difficult than normal. You will not just be able to walk into the first bank you see and get a home loan on the spot. You may have to apply to several different lending companies before your application is accepted. One problem that many people with bad credit have is that they give up too soon. Not every lender has the same exact lending criteria. In fact, many of them are completely different. Therefore, you need to go to as many lenders as it takes to get the job done. 

High Interest

One thing that will inevitably come with bad credit is a high interest rate. You will probably not be able to find an interest rate that you really like. Most of the time you will be a few points higher than what the market has because of your bad credit score. Lenders are in the business to make money. They know that with your bad credit score, you have a higher than average chance of default on the loan. Therefore, they want to make as much money as possible for taking the risk. More risk for them also equals more reward.

While high interest is not fun to deal with, it is not a deal-breaker. You can still live with high interest and make it work if you are dedicated to success. You will be spending more money over the life of your loan, but at the end, you will still own the house. 

Unfavorable Terms

When you have bad credit, you will undoubtedly be dealt some unfavorable terms as well. In addition to dealing with the high interest, you will probably be faced with other terms that you don't exactly prefer. You may not qualify for a 30-year fixed mortgage. However, you may qualify for an adjustable rate mortgage. This type of mortgage is a little more risky as the interest rate will fluctuate from year to year. 

Another common loan program that is given frequently to those with bad credit is the balloon mortgage. A balloon mortgage is when you only pay interest on the loan during the payment period. For the entire life of the loan, you are only paying the interest every month. Therefore, the balance of the loan still remains. At the end of the loan, you will be required to repay the entire amount of the loan. This can be a dangerous trap to get into, though, if you are not prepared.