Requirements for mortgages are very strict. The only way to buy a home with bad credit is a HUGE downpayment — a lot more than 20%.

You should work on cleaning up your credit. Mortgage companies will insist that all derogatory items be settled. Start with the newest ones and work back to the oldest. Negatives age off 7-1/2 years from the date of first deficiency. So you may want to let anything close to the 7 year mark just age off.

If you have any single entry derogatory items, like utilities and medical bills, negotiate a pay for delete — you pay $x and they remove the item from your credit. This will improve your score. However, this doesn’t work for regularly reported items like credit cards and installment loans. Collection agencies can only remove what they report. Original creditor’s charge off remains.

Get any settlement agreement in writing and save it along with your payment proof forever. Don’t give collectors direct access to your bank account.

You should also put more money aside for the downpayment and closing costs. The bigger your downpayment, the more likely you will get a mortgage.

You are a good candidate for a FHA home loan.
You will be in a better position for approval if you document all of your “problems” and show them what you did to handle the financial problems that are a sign of the times. You are not alone.
You need a home that the seller is willing to sell FHA because they make their own inspection. In this economy, it should be easier for you. It would be great to find a very understanding real estate agent who has good bank connections.
Also you could check out the bank or credit union where you have your checking & savings account for their “preapproval” for FHA loans.

Let FHA Loans Help You – HUD
Information about loans from the U.S. Department of Housing and Urban Development any … FHA has a loan that allows you to buy a home, fix it up, and …www.hud.gov/buying/loans.cfm

GOD bless us always.
MBA-Boston Univ.
CPA-retired

If you have more questions, just send them via this yahoo site.

You might be able to set up a Lease Option to Buy with someone selling their home. It’s really hard to get a loan right now even if you have excellent credit. I think a lease option, where part of your rent each month goes to a down payment, would work for you. Later you convert it to a purchase contract.

No I don’t know how you can get a loan with bad credit. May I suggest you take a good look at the economy and realize that one of the reasons we are in such trouble is because people bought houses they really can’t afford and now they’re facing foreclosure. I wouldn’t want you to get into that situation.