10 Tips for Buying Your First Home with Bad Credit

Buying your first home is a great investment in your future. But if you have bad credit, buying the home of your dreams can seem out of reach. That doesn’t mean it is. You just need to know where to start and how to make your application as strong as possible.

10 Tips to Make Buying Your First Home with Bad Credit Easy

Buying your first home with bad credit is possible. Here are a few proven tips to help make it easier.

1. Know Your Credit Score

If you think your credit score is on the low end, find out exactly where you stand. You can check your credit score for free online.

2. Shop Around for Loans

Different lenders will view your credit different ways. This means you’ll need to shop around. Get quotes from at least three lenders and choose the one that offers you the best loan terms and interest rate.

3. Start Paying Down Existing Debt

The more debt you have, the harder it will be to qualify for a loan. Start paying off your existing debt as much as you can before buying your first home. This will boost your credit score over time.

4. Look for Homes You Can Afford

When you’re buying your first home, look at properties you can truly afford. This means you might not get the home of your dreams, but you’ll keep your budget intact.

5. Make a Larger Down Payment

If you can, make a larger down payment on the loan. The more you pay upfront, the stronger your loan application will be.

6. Choose the Right Type of Loan

There are loans for first-time buyers with less than perfect credit. Talk to your mortgage broker about those options.

7. Be Ready for Higher Interest Rates

Bad credit means lenders will have less confidence in your application. Be ready for higher interest rates on each loan you apply for.

8. Look for Ways to Boost Your Income

Find ways to increase your income before you apply. The more you make, the better your debt-to-income ratio will be.

9. Consider Waiting

There’s no shame in waiting until your credit score improves. Pay off your debt and only buy when you’re ready.

10. Consolidate Your Debt

If you have too much debt and struggle to keep up with payments, consolidate it. This will give you a lower interest rate and makes paying your debt down simpler.