Subprime mortgages
Have a credit score below 500? You're officially in the "bad credit" zone. But, you may still be a candidate for a loan, even if you can't qualify by FHA standards, by going with a subprime mortgage. The word "subprime" still sends shivers down the spines of many people because loans extended to what many industry professionals considered to be unqualified applicants were largely blamed for the last housing crash. Accordingly, many of these opportunities dried up in the aftermath.
Today, though, subprime mortgages are available. Keep in mind that minimum credit scores will depend on the individual loan and lender, and each borrower's unique set of financial circumstances. And, you'll pay for the privilege of being extended a loan with higher rates and/or fees.
"Subprime mortgage lenders mostly use collateral like equity earned when considering a ‘refinance' or a more significant down-payment when talking about a ‘purchase money' transaction," said First Time Home Financing.
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