Bad credit mortgage lenders

[shannalynn35]

Hi everyone! I'm curious to know if anybody with poor credit has ever worked with a mortgage lender that will work with you?

Unfortunately my scores are 523, 543 and 563 the only bad on my credit report is medical bills from when I had to spend 26 days in the ICU and I maxed out my health insurance. Other than that my auto loan for the past 4 years with no late payments is perfect.

I am in a position where I have been renting from my landlord for the past six years, but unfortunately, when my lease is up at the end of June I have to move which with the rent increases here in Florida each year I'm ok with. I really want to buy when my lease is up so at least I own something because these rent rates are ridiculous here.

I keep seeing New American Funding, Carrington, Cross Country and Guild. Does anyone have experience with any of those or do you know of a lender that would be willing to work with me? I've been at my job for 5 years so I do have stability.

Thanks in advance!

[ShanetheMortgageMan]

I'm familiar with all of those lenders but none of them specialize in lower score/poor credit - Carrington will go to lower scores but their underwriting is overly picky, the other 3 are correspondent mortgage lenders who underwrite to other investors guidelines (in all fairness, this is how the vast majority of mortgage lenders operate) and tend to be more conservative when it comes to lower scores, assuming they go to 523/543/563.

Where did you get your scores from?  A loan officer or are they the mortgage scores from here at www.myfico.com?

With scores below 580, unless you are eligible for a VA mortgage, you'll be required to put at least 10% down on a home and that is with FHA financing.  I'm not aware of any lenders going below a 580 for conventional financing, but with a 580 score generally you need to put 20% down, once you get to a 620 then there start to be lower down payment options with conventional financing.   USDA financing is 100% financing, but 560 is the lowest score that I know lenders are going down to, and you also have to buy in an eligible rural area and make no more than 80% of the county HUD median income.

How much have you budgeted for the home purchase?  Down payment & closing costs.

[VAMortgageGuy]

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@shannalynn35 wrote:

Hi everyone! I'm curious to know if anybody with poor credit has ever worked with a mortgage lender that will work with you?

Unfortunately my scores are 523, 543 and 563 the only bad on my credit report is medical bills from when I had to spend 26 days in the ICU and I maxed out my health insurance. Other than that my auto loan for the past 4 years with no late payments is perfect.

I am in a position where I have been renting from my landlord for the past six years, but unfortunately, when my lease is up at the end of June I have to move which with the rent increases here in Florida each year I'm ok with. I really want to buy when my lease is up so at least I own something because these rent rates are ridiculous here.

I keep seeing New American Funding, Carrington, Cross Country and Guild. Does anyone have experience with any of those or do you know of a lender that would be willing to work with me? I've been at my job for 5 years so I do have stability.

Thanks in advance!

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Like Shane said, Carrington is the actual lender most brokers/mortgage lenders use for sub 580 scores. The other lenders sell the loans off so they have underwrite to the end investor's guidelines. 
A great feature with FHA, is they don't care about medical collections. In fact, you could dispute every single medical collection you have and FHA wouldn't care. Disputing them should improve your scores. You just need to get to at least a 580 middle score so you only need 3.5% down.