Contrary to popular belief there are programs out there for those who have bad credit. You will still have to qualify and prove that you could pay back the loan but there are several government programs available, with more to come so stay informed. First time home buyers benefited from the $8, 000 tax credit this year that may be extended into 2010 as well as increased to help the housing market recover.
By far typically the most popular mortgage financing for people with bad credit are FHA loans which the government makes possible for individuals who can't qualify for bank financing. You need to show a great income and work history preferably with the same company for a minimum of 2 years. A certain amount of credit dings and late payments are acceptable however the more that you show the more your loan will cost you over time. Also your mortgage payments shouldn't exceed more than 30% of the gross take home pay. FHA mortgage financing is among the best ways to get into a home with poor credit score. You should definitely check around online to see what FHA loan providers are offering and compare terms carefully. If you have had a bankruptcy you'll have to wait 2 years before applying for a FHA loan and show a great payment history since. People looking for information on refinancing their FHA mortgage or other government programs can review to the HUD. gov site.
Veterans with bad credit can try to get mortgage financing with a VA loan. These are excellent loans but you or your spouse must will be in the military to qualify. There are 100% mortgage financing loans available that are assumable and carry no prepayment fees and penalties. You can get into a home with no deposit but you will still need money for escrow as well as closing costs. For more info on VA loans review to, Homeloans. va. gov.
I will end this where everything began with the sub prime lenders who were major contributors towards the meltdown. Its true that lending restrictions have increased dramatically and you'll always pay higher interest rates in the sub perfect market, so shop around so that you will understand what the best rate is. There are many sub prime lenders online so do your research before you apply and you won't get ripped away. Hopefully you can clean up your credit report with time and then refinance into a better loan later. Try to obtain a fixed rate loan right from the beginning. If you do not your payment could increase dramatically when interest rates increase. This is a major reason there have been a lot of mortgage foreclosures. Think of your credit as a snap shot in time and concentrate on steadily improving it so you will qualify for the best rates in the long term.