Bad Credit Mortgage Loans for California Home Buyers
California home buyers with bad credit often have a hard time qualifying for a traditional or “regular” mortgage loan. So in this article, we’ll explore some of the other bad credit mortgage loan options that are available to such borrowers.
At Independent Lending, we specialize in offering hard money loans to borrowers in California with bad credit. So please don’t hesitate to reach out if you have questions about any of the information presented below.
Why Traditional Lenders Require Good Credit
When a traditional mortgage lender reviews a loan application, one of the first things they consider is the borrower’s credit score. In some cases, these scores can “outweigh” all other checkpoints. That makes them one of the most important qualification criteria for borrowers.
It all starts with your credit reports. A credit report is a record of an individual’s borrowing and repayment history. It includes information about various credit accounts, such as credit cards, mortgages, and other loans. It also contains information about the borrower’s payment history. This data goes through a scoring model to produce a three-digit number known as a credit score.
Traditional mortgage lenders consider borrowers with bad credit to be a bigger risk. That’s because a low score suggests that a person has a history of missing payments or defaulting on their debts.
When it comes to the major banks and lenders in California, bad credit mortgage loans can be a rarity. These lenders shy away from borrowers with past credit issues, simply because their business models revolve around minimizing risk.
What Score Is Needed to Qualify for Financing?
There is no hard-and-fast rule that dictates the credit score needed to qualify for a mortgage loan in California. It can vary from one program to the next, for a number of reasons.
For example, the government-backed loan programs like FHA and VA mortgage loans tend to allow for lower scores, compared to conventional financing. We’ll talk about the reasons why in the next section of this article.
Generally speaking, most traditional mortgage lenders want to see a credit score of around 620 or higher for a conventional loan. But that leaves a lot of borrowers out in the cold, since many people have scores that fall below that threshold.
But that doesn’t mean you’re out of options. On the contrary, there are several bad credit mortgage loan options available in California. So let’s talk about those next.
Bad Credit Mortgage Loan Options in California
Borrowers with bad credit have several mortgage options that are worth exploring. These options might require a larger down payment or a higher interest rate. But they can help borrowers with poor credit qualify for mortgage financing to buy a home.
As you can see, there are several ways to obtain a bad credit mortgage loan in California. The key is to choose the best option for your particular situation.
We Specialize in California Hard Money Loans. At Independent Lending, we specialize in making hard money loans for borrowers with credit issues in the past. If you fall into the category, or you’ve had trouble qualifying through a regular lender, we encourage you to contact our team.
We can review the value of the property you want to buy, among other factors, to determine how much you might be able to borrow. Our qualification process considers the value of the collateral property, rather than your credit score. So you could potentially qualify for financing, even with bad credit.
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