Home Loans: Bad Credit and a Low Income Are Not Barriers


There are two things that any potential homebuyer needs: a good credit score and a high income, right? Wrong. In fact, though the qualifications for home loans are among the most stringent, people with bad credit or no credit history and low incomes can still bet on the path to homeownership. This is accomplished through special loan programs available through private online lenders. This article will review the basics of getting the home loan you need with a low income and bad credit score.

How Is This Even Possible?

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The first distinction that I should make is what the term bad credit can mean. In fact low credit scores can happen for two reasons. The first reason is irresponsible spending and loan repayment in the past. People who have gotten into trouble with money before are likely to have bad credit. Home loans in this case are hard to find.

However, bad credit can also stem from no credit history. Many people who live in rural areas, for example, may have never used a credit card or taken out a loan. This lack of credit history can also cause bad credit. Home loans in this case are still available.

Income Qualifications

The other big issue when it comes to home loans is your income. There is a myth that only people making large salaries can qualify for a home loan. However, in special situations there are ways around this requirement as long as the borrower is willing to sacrifice. That is because a steady income is just as important as the amount of that income.

Getting a home loan with a low income is still possible if your paychecks are stable and you have been with your job for at least a year. What you need to do is prove to the lending officer that you have a reliable source of money from which you can repay your home loan.

Pleading Your Case

If you have bad credit and a low income, home loans are available to you, but they are not as easy to acquire as those granted to people with good credit and a high income. You will need to do your homework and put together a portfolio of sorts which proves your credit worthiness. You may choose to compile a history of payment for rent, utilities or other expenses. Consider getting letters of reference from employers or former teachers that speak to your character and reliability.

The most important question that any lender asks about a potential borrower is: will he repay this loan? To increase your chances of getting the money you need, you have to show your lender that the answer to this question is yes.

Finding the Right Lender

If you have bad credit and a low income and are looking for a home loan, traditional banks are not likely going to help you out. The same is true for credit unions. Generally, your best bet is to look towards private online lenders who specialize in these types of loans. There are also loan brokers who can assess your situation and put you in contact with several lenders who may be able to help you out. Start your search for your home loan today. Bad credit and a low income are not the barriers that you think.


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