Can you get a mortgage with bad credit? Tips for getting approved

Having a low credit score can make buying a home more challenging. But while lenders use your credit score to evaluate risk, bad credit doesn't always disqualify you from taking out a mortgage.

Several mortgage programs, including FHA, VA and USDA loans, may provide an opportunity to purchase a home for borrowers with lower credit scores. Understanding how lenders evaluate applications, available loan options and how to strengthen your odds can help you learn how to get a mortgage with bad credit and determine whether buying a home now makes financial sense.

In many cases, it's possible to get a mortgage with bad credit. However, it's important to note that a lower credit score usually results in a higher interest rate, larger down payment requirement or stricter eligibility standards. While a lower credit score can be a limiting factor, lenders typically evaluate more than just that single metric. Additional financial health indicators, such as income, debt-to-income ratio (DTI), savings, employment history and down payment amount, can all influence a lender's decision.

While "bad" isn't an official credit score rating, lenders most often use the FICO scoring model, with the following ranges, to make lending decisions.

Lenders generally classify lower credit…

Original source: https://www.usatoday.com/money/