If you have bad credit, your options will be limited compared to someone with perfect credit. Youll want to work with a subprime lender, which is a lender who caters to people in your situation. Talk to your loan officer about the options available to you.When you have bad credit or below average credit and are forced to use a sub-prime lender or a non-conforming lender you usually will not be required to pay PMI, even if you do not have 20% equity in your home. The reason being is because you will usually have to accept a considerably higher rate than a good credit borrower would qualify for and this much higher interest rate will offset the need for the PMI by the lender.
Bad credit mortgages are often referred to as "Non-Conforming" loans because your credit profile does not qualify under Fannie Mae guidelines.
Non-comforming lenders offer fixed rate mortgages and adjustable rate mortgages with varying options such as interest only and high loan to values.
Your options are typically limited by the amount of equity in your home and your FICO score.
Home loans are even available for those with FICO scores less than 500. Consult with your mortgage professional. There are tons of programs available for those with less than perfect credit.
This
is not a commitment to lend. Restrictions may apply. Information
is subject to change without notice. All loans are subject
to credit approval. Equal Housing Opportunity.