Having a subpar credit score can hinder mortgage eligibility, especially with lenders imposing minimum credit score thresholds. Generally, a credit score below 600 is considered unfavorable. Lenders willing to accommodate borrowers with poor credit typically require higher mortgage rates, making it a costly status. As bad credit mortgages are typically short-term measures, their usual term length ranges from 6 months to 2 years, during which borrowers are expected to enhance their credit. Alternatively, individuals with strong familial or friendship ties may consider asking a creditworthy relation to cosign with a traditional lender offering lower rates.

How to Secure a Mortgage with Poor Credit

Seek a mortgage broker experienced in alternative lending:

Collaborate with a broker with expertise in alternative lending to enhance your chances of securing a favorable rate.
Brokers can advocate for your creditworthiness, emphasizing positive trends and current financial standing, even if historical events impacted your credit.

Obtain pre-approval for a mortgage:

Regardless of your credit score, securing a mortgage pre-approval is essential before venturing into the housing market.
Pre-approval offers a realistic estimate of potential lending, crucial for making informed property decisions.

Compare mortgage offers:

Don’t settle for the first offer; explore multiple options.
If working with a broker, they may negotiate for a better deal.
Independently comparing offers is essential, considering rates, fees, terms, and total costs for an informed decision.