Financial Hardships and Getting a Loan: It “Is” Possible


If you’re one of the nearly 25 percent of Americans who have a credit score below 600, you are not alone. You may be despairing that the financial hardships you have experienced in the past are making it impossible to buy a home. Fear not, however, as there are many home loans for bad credit that can help you buy your dream home and start building equity.

As an independent mortgage lender, TwinCity Lending has access to a broad range of mortgage loans, including those that are available for people with bad credit. In other words, we know how to get a home loan with bad credit. If you’ve been worried that you’ll never be able to buy a home because of your not-so-great credit, take heart. It is absolutely possible to become a homeowner even if you have had financial hardships that weakened your credit rating.

Find a Mortgage Lender Who Helps People with Bad Credit

If your credit isn’t perfect, it’s important to find a mortgage lender who is willing to work with you to buy a home. Big banks often stick with conventional products that are harder for people with average or below average credit scores to qualify for. Credit unions, community banks, and independent mortgage lenders such as TwinCity Lending specialize in helping all prospective buyers, including and especially those with lower credit scores.

Check Your Credit Report for Errors


Your mortgage lender looks at your complete financial picture, but your credit score is a large part of it. A surprising number of people have errors on their credit reports that adversely affect their credit scores. Obtain a copy of your credit reports from the three major reporting agencies (Equifax, Experian, and TransUnion) and review it for mistakes. You can get a free credit report annually at

Don’t fall prey to other sites that charge you fees to access your credit reports. Get in the habit of doing this once per year to be sure any negative activity that isn’t yours hasn’t been erroneously reported.

If you notice something odd on your report, follow the steps online or by telephone to make a dispute. Credit reporting agencies are legally obligated to investigate your disputes and make changes if an error is found.

Pay Your Bills on Time

Often a poor credit score is due to your payment habits. If you’ve been late on any bills recently, your creditors can report you to the credit agencies and lower your credit rating. If you’re more than 30 days late, your credit score is dinged, and it’s worse if you are 60 or 90 days late.

To improve your credit-worthiness, get all of your accounts to current status and keep them that way. Set up a payment calendar, reminders on your phone, automatic bill payment, whatever it takes to not be late on payments again. In just 90 days of on-time payments, you can improve your credit score.

Lower Your Balances

Allocate some of your budget to pay down outstanding balances on your revolving debt, especially credit cards. Doing so will improve your debt-to-income ratio and make it easier for you to qualify for a loan or obtain a lower interest rate.

Save Money for a Down Payment

Save Money

Even if your credit history is poor, lenders will be more willing to approve you for a loan if you have a larger down payment. The more you can put down, the less money you will have to finance, which makes a lender look at you more favorably. Some lenders will let you get the money from your down payment from a family member as a gift, but others may not view that favorably.

Look Into Government-Backed Loans

If you’re looking for home loans for bad credit, several loan programs are designed to help people who have never bought a home or who have less-than-stellar credit become homeowners. The federal government backs these loans, so there is less risk to the lender.

Each of these programs has specific requirements, but your mortgage lender can fill you in on the specifics. Three common government-backed programs for potential homebuyers are Federal Housing Administration (FHA), US Department of Agriculture (USDA), and Veterans’ Administration (VA) loans.

FHA Loans: If you’re looking for how to get a home loan with bad credit, FHA loans were designed for you. Since they are backed by the Federal Housing Administration, mortgage lenders use these loans to help people with credit scores as low as 580 buy a home. An FHA-backed mortgage often only requires a 3.5% down payment.

USDA Loans: This government program assists middle-income Americans with buying a home in rural or suburban areas. USDA loans have very low down payments, more flexible credit requirements, and allow you to fold closing costs into the loan. All these benefits mean that if your credit isn’t great or you have no cash saved up, it is still possible to buy a home.

VA Loans: If you’ve been an active-duty member of the US Armed Forces for 90 continuous days, you may qualify for a VA loan. These loans require no or very low down payments and have less strict credit requirements.

Get Private Mortgage Insurance


If you have bad credit and do not have a 20 percent down payment to purchase a home, you can make yourself more attractive to lenders by obtaining private mortgage insurance. These monthly insurance premiums (usually paid as part of your mortgage payment) insure you against a potential loan default.

Getting mortgage insurance increases your mortgage payment, but it usually decreases the down payment your lender will require, sometimes eliminating it altogether. When you have paid your mortgage balance down enough, the mortgage insurance premiums will no longer be required.

Let TwinCity Lending Help You

At TwinCity Lending, we specialize in helping people purchase their dream home, even if they have poor credit. We will assess your creditworthiness honestly, and find opportunities for you to get approved for a mortgage. Our professional staff has a can-do attitude and will go the extra mile to ensure that we can find a loan option for you.

We will also work with you to make yourself more favorable credit-wise, so you can get the best deal possible. Give us a call today to get started. We won’t judge your past financial hardships. We will fight for you to become a future homeowner and relieve you of the worry about qualifying for pre-approval.

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