The Weekly Bad Credit Home Loan Question

Reader Question: Our credit sucks. Is there any way we can get a loan for a house?

Somebody asked a similar question a few days ago. Actually, their situation was worse. They wanted to buy a home with bad credit and no money down ... which is virtually impossible in this market / economy.

This is actually a very common question. Once a week, somebody will write in asking about ways to buy a house with a bad credit score. I wish I had some good news to offer in such cases, but I don't. It is extremely difficult to get a mortgage loan with bad credit these days.

Here's what you must realize. Our financial institutions are failing right now. People are using the word "crisis" to describe our current economy. And much of this mess can be traced back to the subprime loans of the 1990s and early 2000s. Many mortgage lenders are buried under non-performing loans (from borrowers who defaulted on their mortgages).

Depending on what you mean by a "bad" score, it will be very hard to find a willing lender in this market. In fact, many home buyers with decent credit scores are having trouble qualifying for mortgages these days. I just helped the folks from NBC Nightly News find people like this for a story they are running this week.

Wish I had better news for you, but I just don't. Buying a house with bad credit is hardly an option right now.