Buying a home is stressful under the best of circumstances, but for someone with less than perfect credit, it can seem impossible. Fortunately, there are lenders that are willing to take a chance on someone with less than perfect credit. Finding the perfect lender is more important than ever when your credit contains black marks, but there are ways to make yourself more attractive to lenders.

By following these guidelines, you can show lenders that you are a trustworthy and reliable borrower.

Prove that you are reliable

Before a lender trusts you with a mortgage, they want to see that you are responsible with other aspects of your life. They may overlook poor credit from years ago if you are currently up to date on payments. Lenders may look at some types of debt more critically than others. For example, outstanding medical bills may be looked at with more leeway than outstanding credit card debt or an automobile repossession.

Show fiscal responsibility

If you are currently renting an apartment or home, ask the property owner to write a letter testifying that you always pay promptly and in full. Utility companies will often provide a letter of credit recommendation if asked as well.

Expect lenders to require a down payment

Even if a lender advertises a no down payment loan, have some money available. Having money available for a down payment shows the lender that you have been planning this purchase and have the discipline to set aside money to meet your goal.

Once you have taken these steps to make yourself more attractive to lenders, take some time to find the best lender for your situation. Some lenders specialize in mortgages for people with less than perfect credit. While there are many legitimate lenders who do this type of lending almost exclusively, there are other less than credible lenders who prey on a person’s desire to own a home as a way to generate an income.

Be Aware of Scams

People with poor credit are vulnerable to scam artists. These scammers volunteer to fix the person's credit or offer loans with less than perfect credit. Typically, the person with questionable credit pays exorbitant fees under the guise of counseling or paperwork expenses. They then learn that they don't qualify for the loan.

It is important to realize that even people with less than perfect credit are attractive to lenders. The lender is in the business of lending money, and if they only lent money to people with perfect credit, they would not make enough loans to stay in business. If you have bad credit, don’t be afraid to visit a conventional lender. If you are unsure about the best lender for you, choose a mortgage broker. Mortgage brokers have more than one lender to choose from when finding money for their clients. They know each of their lenders well, including what qualifications each have and how stringent they are on creditworthiness.

Be Patient with the Approval Process

Once you have decided on a lender, you should expect the lending process to be a little more rigorous than it would be if your credit were stronger. The lender will want to see verification of your income and expenses. Many will also go over your credit report with you and ask you to explain anything that concerns them.

The process of getting approved for a mortgage with bad credit can be daunting, but it is worthwhile. The lender will take great pains to ensure that you are capable of staying on top of your mortgage payments, but this benefits both you and the lender. If the lender is concerned that you are trying to borrow too much money, or that you have too much outstanding debt, they can help you explore options to improve your credit situation.

If you have poor credit, you should expect to pay a higher interest rate than the one advertised by your lender. Your loan is considered higher risk, so the cost is greater. Don't let this discourage you.

Yes, a higher mortgage rate can add up to many thousands of dollars over the lifetime of a loan. However, you aren’t stuck with this interest rate for the 15 or 30 years of the mortgage. As you make mortgage payments, your credit will improve. Aim to keep credit card debt down and always pay your mortgage on time. As your bad credit history ages, it will disappear from your credit report. It will be replaced with your history of timely mortgage payments and low utilization of credit cards. Once you have improved your credit score, visit your lender and ask about a refinancing plan to lower your interest rate.