How to Find the Best Bad Credit Mortgage Lenders

Where you get a bad credit home loan is really just as important as the type of loan you get. A good bad credit mortgage lender saves you thousands.

This page:

  • Lists a few strategies for finding a good bad credit mortgage

  • Recommends some flexible bad credit mortgage lenders

Over the next few pages, we examine all types of bad credit mortgages.

After reading this section, you should be familiar with all your bad credit mortgage options and, hopefully, have chosen one that meets your needs.

How to choose a bad credit mortgage lender

First things first. Often, the best bet for a bad credit borrower is applying with a prime lender first before resorting to bad credit mortgage lenders.

Hey, maybe your credit isn't as bad as you thought. And even if it is, good online lenders offer free, commitment free pre-approvals, so taking a shot at the lowest rate possible is worth the time and effort.

Prime lenders also usually have a wider range of mortgage products available than strictly bad credit mortgage lenders, so if you have, say, a 7-year ARM specifically in mind, with a prime lender you have a better chance of landing exactly what you're looking for.

On the other hand, prime lenders aren't that flexible. That's why they're prime lenders. Bad credit mortgage lenders are a lot more forgiving. The product line may be more limited, but it's also more accessible.

In our opinion, the best course of action is to try both. Subprime mortgages vary so much from lender to lender, that you could be quoted very different rates. And online lenders have an easy application process and low overhead, which makes it very easy to get quotes that are significantly lower than the national average.

Nontraditional bad credit mortgage lenders

(By this, we really mean prime lenders.) If your credit is just so-so, try Eloan. They've got great rates, a huge line or mortgage products and no lenders fees. Pre-approval is fast and free, so it's worth a try!

If on the other hand, you'd like a very good shot at approval, and home loan products more specifically tailored to credit repair . . .

Our favorite bad credit mortgage lender

is Fullspectrumlending, a subsidiary of the reputable countrywide family of lenders. They specialize in bad credit mortgages, and you can qualify even with a bankruptcy or foreclosure in your past.

They offer special 2 and 3-year credit repair ARMs specifically for poor credit borrowers who plan on moving soon, and credit building FRMs that reward responsible payments with a falling interest rate.

The other great thing about Fullspectrum is that they don't charge PMI on any of their mortgages. (There's a higher interest rate, of course, but that has the advantage of tax deductibility, which PMI doesn't.)

You even get a $250 cash rebate for applying online! Try Fullspectrum now, or read more about them.

Remember that with any credit-building mortgage, paying the loan on time is vital. Missing or making late payments are often penalized severely under these plans, so only undertake one if you're fully committed to building a history of responsible credit.

Next: Getting a fixed interest rate on a bad credit mortgage

Get a little financial lesson every week:

Saving on taxes is a year-long process. Start learning how to save year-round by reading our weekly personal finance newsletter, with articles, tips, blog posts, and great deals that will save you money.

Subscribe here: