While mortgage rates and housing prices have continued to fall, which makes today a great time to buy a new home, mortgage lenders have cut back on their lending to risky borrowers. Stated income mortgage lenders have found that borrowers with bad credit scores are far more likely to ultimately default on their loans, and therefore the lenders are less willing to lend to these borrowers. Luckily, you can still get a mortgage with bad credit history if you meet some other lending requirements. Accounting certifications and qualifications must be met, but there is hope.
For people with bad credit that are looking to get a mortgage with a stated mortgage lender, one way to improve their chances of being approved for the loan would be to put more money down at closing. A few years ago, many banks were willing to provide mortgages to people that had less than 5% down. Since housing prices have fallen so dramatically, this lending practice has led to millions of underwater mortgages. To offset this risk, most lenders now want their borrowers to have at least a 10% down payment. Those with bad credit will likely need 20% down to qualify for the best rates available.
In order to qualify for a good interest rate with a stated mortgage lender, a borrower with bad credit will also need to have a strong income to support the loan payments. For borrowers with bad credit, a lender will likely want a borrower to have a debt to income ratio of 25% for their primary residence. Because of this, a borrower should be sure to state as much income as possible when applying for a loan.
In conclusion, most stated income mortgage lenders have drastically cut back on the amount of lending that they do to people with poor credit histories. Fortunately, for people with bad credit, there is a way to get a mortgage with bad credit history.
The author has spent a lot of time learning about stated income mortgage lenders and other related topics. Read more about mortgage with bad credit history at the author’s website.