When you have bad credit, the terms of the mortgage won’t be as good as someone with a good credit score. But there is one place that is designed to help homeowners having credit problems or bad credit. This may be the program that helps you get the right mortgage and help your credit situation.

With the current government stimulus plan, plus the government looking to help people who are currently having mortgage problems, the Federal Housing Administration may be the place to find the right loan for you.

How to qualify for an FHA Mortgage when you have Bad Credit.

To start qualifying for FHA’s credit standards, if you have had a bankruptcy, it must be closed and occurred more than 2 years ago. If you’ve had a foreclosure, it has to be at least 3 years ago.

If you have bad credit, you must show to FHA that your credit problems are behind you or that you are currently working to clean them up. This means you can show FHA that you have been current with your bills. A track record of paying them on time for about a year will show good faith in fixing your credit.

To qualify, you must be able to document your income. With the present economic situation, lenders need to see your income. You should be able to show you have steady employment. What if you’re self-employed? You will probably have to show about 2 years of income. These are just general guidelines. Always ask the lender for specifics. It never hurts to ask, right?

Your total monthly payments for housing and other debt should not exceed 43% of your monthly gross income. If possible, pay down or pay off your debt to show a better income to debt ratio and improve your chances of getting a refinance mortgage.

The new loan from FHA cannot exceed the loan limits FHA establishes for your area. The current ranges are from $270,000 to $729,750.

You can refinance up to 96.5% of your homes value. This does not allow you to take cash out. What’s great about this is that you obviously don’t need a lot of equity to obtain a loan.

This is just a quick introduction to getting this mortgage. Read some more to learn about FHA loans to help you get mortgages for bad credit.