If you are looking for a home loan and you have poor credit then you may wondering if anyone offers mortgages for people with bad credit  history. In fact, there are companies that specialize in this, and we will cover how to find them and what the advantages and disadvantages are to using them. Bad credit mortgages are in fact, a big business these days, and you are sure to find a mortgage company that will lend to you even if you have had past credit problems or a bankruptcy. We’ll cover everything you need to know to get this type of mortgage.

Bad credit mortgage companies are called subprime lenders and these type of lenders specialize in lending to those with bad credit. They are called subprime because the interest rate that they offer is above the prime rate that is being offered by banks and other mortgage lenders. Mortgages for bad credit means that the home buyer will pay more than they should for a home loan, because the company is taking a chance by lending to someone who has a history of not paying their bills, or not paying them on time.

There are some things that you can do to improve your chances of getting approved for a mortgage with bad credit. One thing that you can do is to ensure that none of the bad credit history that you have is recent, say within the past six months. The more recent the items are on your credit report the more they hurt your score. Items on your credit report that are several years old do affect your score, but not even close to as much as more recent items, say within the past twelve months. If you can show that your more recent history is solid then you have a much better chance of getting approved, even with some bad credit.

Also, your income is a factor that will affect whether or not you get approved. People with a large income are much less of a risk to lenders than someone who is barely scraping by. If you make over $50,000 a year then you have a much greater chance of getting approved for financing then someone who makes $1200 a month. Also, make sure that your debt to income ratio is below 35%. This is another factor that influences whether or not lenders will approve your mortgage loan or not. If you are drowning in debt, then you are less likely to get approved for a mortgage than someone with no debt.

Another huge factor not only in getting approved for a mortgage but also to get the interest as low as possible is to offer a large down payment. A down payment is like the antithesis of your credit score. If your credit score is very low it is quite possible to still get financed with a large down payment. One thing that many people don’t know is that any car lot or mortgage company will finance you, no matter what your credit, with half down. Some will only need 25 percent down to do the same thing. So, if you want to make sure you are approved, save  up a large down payment.