Bad Credit: Can I still get a Home Loan in Arizona?

The answer to the question is that it is not impossible, but you will have a long road ahead of you. There have been so many default loans on sub-prime mortgages that were the beginning of the financial problems that began in 2008, that many lending companies are very cautious when it comes to giving loans.

The good news is that even with bad credit you can find a home loan in Arizona. The minimum standards are higher today than they were a few years back and it more than likely will cost you more to obtain a home in Arizona.

One of the best ways in which to get a home loan in Arizona is probably via FHA or VA. VA is only for those that are serving in the military or were once in the military. Both of these organizations will accept individuals with a bad credit score at 580 but of course, most lenders today would like to see a credit score of 620.

You cannot contact FHA or VA directly as they do not write home loans, but you can speak with the lending company of your choice for this type of loan. These organizations have set standards that must be met in order for them to guarantee the loan, but the actually acceptance begins with the lending company and the credit scores they accept and their own terms before they will send the loan to FHA or VA for their guarantee.

In some cases, you may find smaller lending companies in your area in Arizona that will give you a loan even if you have a bad credit such as credit unions or community banks, yet even there it depends on the reasons for and kind of debt you are in. The most important thing for you to remember if you have bad credit and are looking for a home loan in Arizona is to shop around. Just because one lender will offer you a loan with high interest rates does not mean another will not offer you a better interest rate. Each lending company offers different options and types of loans, comparing all your options will ensure you can find a great deal on your home loan even if you have bad credit.

The sad news is that the interest rate is going to be higher if you have bad credit period. For those with a FICO score of 620 or higher in most cases will have a 1.6 interest rate higher than a person that has a credit score of 760 or more which calculates to 6.3% compared to 4.7%. This can be a large amount of money you will be paying monthly for your mortgage loan.

You can work on fixing your credit report if you have the time. If you need to buy now, you still have a few options even with bad credit to purchase your dream home in Arizona. If you are married and of you has a good credit rating, obtain the home loan only in the name of the spouse with the better credit. The downside is that then the income and assets of only the person with the good credit will be used in the qualifying process. If you can wait, this is best choice if you want to get a lower interest rate. On the other hand, if you keep your payments up to date on your mortgage you can refinance later and receive a better interest rate.