No. Even with extremely poor credit, a home loan or mortgage is possible, but your past credit problems may label you as a risky borrower to the lender. To compensate the lender for taking the risk by loaning you money, the lender will probably charge you a higher interest rate. Some lenders also want the risky borrower to have a significant amount of money as down payment, usually 20% to 50%. The worse your credit, the higher the interest rate and the larger the down payment required by the lender.
One problem with having poor credit is that not all mortgage lenders will deal with you. Due to the increase in the number of foreclosures as a result of the past seller’s market, fewer lenders are willing to loan money to borrowers with a poor credit rating. Therefore, it probably will take you longer than average to secure financing.
The good news is that once you have a mortgage and make all your payments on time, you can take your credit rating out of the risky category. It takes about twenty-four months of making the mortgage and all other payments on time for creditors to view you as a good credit risk. You still may have some problems getting credit, but after that period of time you are considered well on your way to a good credit rating.