How to Get a Home Loan With Bad Credit

If you're ready to start house shopping but your financial track record is a bit spotty, you may be on the hunt for home loans for bad credit. Are there really any viable options out there, or will your dream of becoming a homeowner remain out of your reach until you fix your credit?

The reality is that home loans for people with bad credit exist. However, learning how to get a home loan with bad credit can feel daunting.

This guide explores a few practical options for getting approved for a mortgage if your credit score is on the low side. Here's everything you need to know to take your first meaningful steps toward homeownership.

How to get a home loan with bad credit: Step by step

Step 1: Know your credit score

First and foremost, it's important to eliminate the uncertainty from your home-buying journey. Find out what your actual credit score is.

Step 2: Review your credit report for errors

You're entitled to a free copy of your credit report from each of the three major credit bureaus each year.

Kikoff has a free dispute-letter generator to make the process easier. You can use it to generate, print, and mail letters to Experian and Equifax. Our platform can also help you create a letter and electronically submit it to TransUnion.

Step 3: Explore loan programs for bad-credit borrowers

FHA loans are among the most well-known options, as they provide the most flexibility in terms of credit scores.

Step 4: Save for a larger down payment

If you can put more money down, it will make the deal less risky for your lender.

Step 5: Consider a co-signor or co-borrower

A co-borrower is someone who is purchasing the home with you, such as a spouse.

Step 6: Shop around for lenders that work with bad credit

Comparing multiple lenders could save you thousands of dollars over the life of your loan. 

How to improve your credit before applying for a home loan

It can also be helpful to report positive behavior, such as on-time rent and utility payments. With Kikoff, it's easy to report verified rent payments and use this activity to enhance your credit score.

Conclusion

Kikoff is a dynamic credit-building platform devised to help consumers like you improve their credit. It includes a free credit account, a paid subscription option, free dispute tools, and much more.

Add positive payment history to your credit profile with Kikoff.