What mortgage lender works best with bad credit?

My husband and I are wanting to purchase a home, since our kids are growing and we are running out of space in our rental. We have a bankruptcy from 2005 and a couple of credit card debts that are in collection against us. What company will work with us to get a home loan?

Getting a mortgage with a bad credit can be difficult at this time. The FHA loan would require a credit score of 620 and it is 700-720 for conventional loans. Apart from that, there are other factors too like- your debt-to-income ratio, employment record and such which would also affect your prospect of getting a mortgage.

If you can't qualify on the credit score aspect, you may consider improving your score before applying for mortgage.

SC is right, it will be nearly impossible to get approved for a mortgage with poor credit in these times. You stated you have some current collection accounts. If they carry a balance then you will most definately need to take care of this to improve your chances of raising your credit score. Also as stated above, income, employment, bank history also is a big part of getting your loan approved, closed and finalized.

FHA does require the 620 minimum to even get pre-qualified and even with that you may will need a 3.5% down payment. With the conventional loans they may require a higher down payment and charge a higher interest rate or offer an ARM loan with an adjustable rate. Example, interest only payments for the first 3 yrs then your monthly payment can fluctuate after that time period.

So unless you have atleast 10k saved up and extra money to pay down your debt to income ratio (should be under 85%), continue renting untill you are in a better financial position. Best of luck to you.