My husband and I are looking for a home pretty seriously. So we went to the bank. The bank did a credit check and said that everything on both of our credit had to have a zero balance before they could give us anything. So does this mean that you have to have perfect credit before you can own a home and if so how are all these people with bad credit getting homes. financially frustrated........

No, it does not necessarily mean you have to have perfect credit to buy a home.

What it may mean is that to loan you the amount you may have asked for you need to reduce your monthly obligations in order to qualify for the payment.

Even people with less than good credit can buy a home but the lenders charge them a premium interest rate to make taking the additional risk of loaning them money profitable to them.

You might try calling 1 o mortgage lenders and ask some questions this time, i.e. what is the maximum loan we can qualify for?? How much cash do we need to close with?? What loan program would you recommend that best fits our financial situation??

If you are working with a realtor ask for you reference for any lender. Because if you have low credit score and debts you may want to serious think about your budget and payments to pay off your other debts plus monthly mortgage.

if you are in a low turn around hosuing market you may want to consider rent to own property.

good luck

1.conventional banks have very limited loans they give out and your debt ratio was probably too high for them

2.without looking at your tri-merge credit report it would be impossible to know your particular situation.

3.I do not suggest renting,from an investor standpoint it's great you get the potential homeowners to plop down thousands of dollars of non-refundable deposit,usually the renters treat the property better because there is a chance they might own it so they have a stake in the property,from the renters standpoint it's bad it puts your hard earned non-refundable deposit money into the landlord's hands and puts you in a weak position of negotiating power because the owner knows if you could buy you wouldn't be renting and 95 percent of the time you don't end up buying the house because you learned of defects you don't like,you end up splitting up,relocating,death in family,etc.It's much better to wait a couple of months improve your score and pay down your debt so that when you buy your coming from a position of negotiating power.


4.ask your creditors to raise your credit limits that can help raise your credit score.here is how most credit scoring models work.if your balance is more than 75 percent of your limit that negatively impacts your score,50 percent neutral,and less than 33 percent improves your score

5.some lenders will go as high as 56 percent debt ratio on the back-end but the interest rates are higher,there thought is if you are having to use most of your credit to stay afloat you are going to have a higher risk of defaulting when times get hard,hope this helps some.