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Mortgage With Large Down (~50%) and Recently Damaged Credit

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Mortgage With Large Down (~50%) and Recently Damaged Credit

Serious medical issues got me behind on quite a few unsecured debts. I acknowledge that I was already over my head but, working on lowering expenses and raising income.

The worst is 90 days late, the rest are 1-2 months. Others are current. Car loan shows 1 late, now current.


Now that I am getting functional again, I am working out payment arrangements with everyone, though Discover is a problem child.


I have a beautiful condo outside the US that I am selling (free and clear). Unfortunately, I won't pocket enough to buy a home in my area (though it's low COL).


What I could do is put a large down on the new place, (~50%) while I fix my credit. Do such loans exist for owner occupied?

My most stable income is soc sec (over 65), the rest is freelance. However, a mortgage with these specs should generate a very low payment.


The market here is good and has been for at least the past 5 years, demand is high.


I could potentially buy with a co-borrower with more stable income but, his DTI would likely be a problem.


I realize that I won't get a great interest rate. My plan would be to refi once my FICO is back where it should be.


Also, renting is *not* an option. I can stay with friends until I buy.


Thoughts? Lenders who will work with ~50% LTV?



Re: Mortgage With Large Down (~50%) and Recently Damaged Credit

In underwriting here. Plenty of lender will work with you with 50% down payment - however it is the late payments that could stop it dead in its tracks. How recent are the late payments? If its within the last 24 months changes are you wont be approved through DU or LP (Fannie Mae or Freddie Mac). If its within the last 12 months then no. Usually conventional is okay with 1 or 2 30 day lates but 60 day or more is when the system wont approve.


Your best bet will be to do Non QM. Non QM will bring much higher rates but they okay with late payments and even the Non Prime programs will allow you to do a loan a day after foreclosure. You said that the debts you are behind on have outstanding balances? One thing from working Non QM previously is that while they wont deny you for being late - most make you bring the accounts current prior to closing. And that was before COVID so things may have slightly changed. I would suggest going with a Non QM lender and see what they say. With that credit history right now I really dont think conventional will be an option.


Best of luck!



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