If you have bad credit, it can be difficult to obtain a mortgage, but it’s not impossible.
The obvious solution is to get good credit, to improve your credit score. First pay off all your credit cards. Then use a reasonable amount of credit monthly and pay it all off every month. You are demonstrating your ability to pay bills on time, and this should improve your credit score. You can also get a copy of your credit score from AnnualCreditReport.com and make sure there are no errors which might be lowering your credit rating. (You can find out all about fixing such errors elsewhere in this website.)
Making a big down payment will help you get a mortgage. If you can put as much as 20 – 25 percent down or more, the lenders will look upon you in a more favorable light. You are less likely to default on your mortgage if you have a lot of your own money invested in the house.
You can also get a co-signer. This is someone (usually a relative) who will co-sign your mortgage and guarantee the payments. The co-signer is on the hook for the mortgage if you stop making your own payments. They have a heavy financial responsibility.
Apply for an FHA loan (www.fha.gov). They don’t actually give you the mortgage, but they will guarantee the mortgage, thus helping you get one from a bank.
Look into a bad credit mortgage, also known as sub-prime. These are mortgages especially made for people with bad credit, but be careful. They will charge you a higher rate of interest, and will foreclose on your house if you fall behind.