Home ownership rates in the US continue to increase at a steady rate because of the Bad Credit home mortgage program offered over 70 years ago. Since then Bad Credit has helped thousands of people gain the financial freedom that comes with homeownership. Bad Credit mortgages have helped over 73 million Americans secure the purchase of their own homes by financing military housing, helping low income borrowers afford mortgages and ensuring reasonable interest rates.
Bad Credit mortgages are insured by the federal government, which means lenders are protected in case the loan goes in to default because the borrower can no longer pay. This insurance gives lenders the confidence to give mortgage loans to those who aren’t able to qualify or have been denied for conventional loans.
Bad Credit mortgages are great for potential homeowner’s who would like to buy, but just aren’t able to save enough money for purchase costs. Those who are still in school, newly married couples and recent college graduates can benefit from these mortgage loan programs. A Bad Credit mortgage also allows borrowers who have credit problems due to bankruptcy or foreclosure obtain home loans.
The 203(b) is the most popular option when it comes to Bad Credit Mortgages. Fixed-rate mortgages work well for first-time home buyers because it allows for borrowers to finance up to 97% of their mortgage. This can keep down payments and closing cost low. Another attractive feature of the 203(b) home mortgage is the closing costs can be paid with gift money from relatives, non-profits, or government agencies.
The costs for mortgage insurance on Bad Credit mortgages may be rolled into the monthly payments at .5% of the total mortgage amount. This is around half the cost of what you would pay for mortgage insurance on a conventional mortgage. Once 5 years has passed, or when 78%, the insurance is usually paid off and monthly payments will decrease.
There are no minimum income requirements that applicants must meet to qualify for a Bad Credit mortgage loan, but borrowers must meet debt-to-income ratio guidelines. These guidelines will vary based on the location of the property. Your monthly income and expenses will be closely analyzed to make sure you comfortably afford to pay back the loan. This is done to protect borrowers from obtaining loans that they cannot afford.