Securing Mortgage Loans with Bad Credit Rests on Three Criteria

It would be nice to think mortgages can be easy to come by, but unfortunately, lenders are very cautious about approving them. So, when an application is received seeking a mortgage loan, with bad credit part of the equation, lenders have a natural hesitancy. However, it is important to note that this does not automatically mean rejection.The sheer number of people who now find themselves with poor credit ratings means that lenders cannot afford to simply ignore this demographic. In fact, bad credit mortgage loans are available from lenders with expertise in bad credit lending, offering the best possible terms as a result.But, as with every loan, there are criteria to meet, and only after that is done can an applicant hope to get mortgage approval despite bad credit ratings. Different lenders may have specific criteria, but generally speaking there are three in particular to heed.Proof of IncomeThe most obvious one is that proof of income is provided as part of the application for the mortgage loan with bad credit. After all, repayments cannot be made when the borrower has no income. However, simply quoting a number is not enough. Proof means that a pay slip, bank statement or other kind of receipt is provided.While employment is also a key concern, it stands to reason that with an income, the applicant obviously has a job. But an aspect that greatly interests lenders is how long the applicant has been in their present employment. Often, a minimum period of 6 months full-time employment applies to applicants, especially when it comes to bad credit mortgage loans, to prove that the applicant is not just a seasonal or short-term contract worker.Remember too that the income needs to be enough to cover the repayments, and with some ease. The debt-to-income ratio means that a certain percentage of excess income must remain free to achieve mortgage approval despite bad credit. This is to protect the borrower, ensuring they have ample to cover unexpected monthly expenses, and not find themselves over-extended.The Down PaymentMaking a down payment on a new home is widely seen as simply part of the purchasing process. But it also has a definite influence on an application for a mortgage loan with bad credit. Basically, it relates to the size of the mortgage required, with the higher the down payment, the lower the mortgage sum needed.For example, if a 10% down payment is made on a home that costs $150,000, then $15,000 can be taken from the total. So, a bad credit mortgage loan of just $135,000 is needed. That means that repayments are less per month, and therefore more manageable, which is good for both borrower and lender alike.Of course, the other reason that a down payment is important in alleviating fears lenders have regarding the trustworthiness of an applicant. The fact that as much cash as $15,000 might have been be saved shows financial discipline, which is exactly what convinces a lender to grant mortgage approval despite bad credit.Signs of ImprovementAnd it is this kind of sign that lenders look out for all the time. Granting mortgage loans with bad credit is a bigger risk than lending to someone with a perfect credit record. But if there is evidence that the borrower is doing all he or she can to improve their low credit score, then is highlights the nature of the borrower.Taking out a debt consolidation loan is a perfect example, especially when the monthly outlay has lowered, leaving extra funds to repay the bad credit mortgage loan with. With this accomplished, there can be surprise if mortgage approval despite bad credit is granted.