We all make mistakes, and, unfortunately, many of us have made mistakes when it comes to our money. The long-lasting repercussions of money mistakes can be quite intimidating, and leave a lot of people feeling a bit hopeless when it comes to home-ownership.

That’s what prompted me to write this article – There’s so much misinformation out there leading would-be homeowners to believe that they’re simply out of luck. I’m here to tell you that more often than not, this is simply not the case! I’m speaking from the first-hand experience of helping dozens of individuals who initially informed me that their case was “different” and they stood no chance of getting a mortgage.

But where do you begin? Well, if you’ve previously messed up and missed loan payments or have been dodging an even dodgier loan for a few years, it’s time to own up to it and see where you stand in the eyes of an underwriter: Get your credit checked! Yes, I know you’re entitled to a free personal credit report every year…

However, these reports are quite condensed when compared to the tri-merge reports a lending institution will see. Therefore I’m recommending you save yourself some time and get the full report up front. You can’t apply for a home loan without it, so let’s bite the bullet and get it done!

If your loan officer is any good, he/she will contact you to review the report together. Essentially check there’s nothing on there that shouldn’t be – You’d be surprised how often there is! At this time, your loan officer will already have a pretty good idea if it’s worth making a full application for a mortgage or not.

If the credit appears to be too damaged to recommend moving forward, then your loan officer can make some recommendations on how to take simple actions that will improve your score.

Often, these suggestions will center around setting a new trend on your report of positive credit behaviors such as calling in to increase your credit line or reducing credit card debt by taking out a small personal loan.

Overall, there are many different strategies to boost your score, and you can learn more about the topic here

Many times though, the damage isn’t quite as bad as the potential homeowner initially let on, and we get the happy privilege of telling the now excited soon-to-be homeowner that they can move forward! See, not all credit damage is created equal. For example, owing money for dental work doesn’t affect your credit as bad as some other late payments might.

Even with significant credit damage, there are potential workarounds. If you can bring a little more cash to the table, for example, a lender may be willing to overlook the score. A larger down payment means less risk to them.

Don’t be afraid to explore government-sponsored loans as well. FHA Loans, for example. Borrowers with a credit score as low as 580 potentially qualify for a FHA loan with a very low down-payment. These programs put less focus on your credit score during the approval process. If your credit score is under 580 then you’ll need at least a 10% down payment.

There’s a whole range of government-sponsored loan programs out there that may fit your needs if you have a low credit score. VA loans for the military, USDA loans in some rural areas, and of course the FHA loans we just discussed. Without knowing your personal circumstances, it’s impossible to make a recommendation. However, I’d be happy to chat with you for 15 – 20 minutes during a free Mortgage Strategy Session. Here’s how to schedule one now: