Before you can get a home loan, you need to qualify. Requirements vary, but one of the most common is good credit history. The credit score helps lenders assess whether the person is capable of managing their debt or not. If you have a bad credit score, lenders are more likely to decline your application. 

Given this fact, does this mean you no longer have a good chance of a home loan because of your bad credit score? This article will tell you how it usually works.

Is Getting a Home Loan Possible with Bad Credit?

As mentioned above, a bad credit score can lessen your chances of obtaining a home loan. However, it is not the sole requirement for consideration. Again, the requirements vary depending on the lender’s priority, but you still have a high chance of approval if you have the following qualifications: 

  • A good and stable income
  • Lack of debts
  • Minor monthly expenses
  • Good employment record

Lenders only reject applications if they think the borrower cannot manage and pay their debts. Still, there are instances when a lender might be more lenient with their requirements. For example, they might give you a chance if they see that your remaining debt is only in a small amount or your current bad credit is linked to an old record. 

What Is in a Bad Credit Home Loan

When all else fails, you can find lenders offering bad credit home loans or loans made especially for people who fall under the bad credit category. Non-traditional lenders usually offer this loan option. Since these lenders will give you a chance to get a home loan despite your “bad record,” it might have major consequences or unfavourable terms. 

They usually have higher interest rates compared to the usual home loans. That is how they compensate for the high risk of lending. 

Usually, this type of home loan is only ideal as a short-term solution to a critical financial problem, not a long-term fix. When borrowing money for a house loan, the terms are usually 25 to 30 years long. Before you commit to any home loan for bad credits, make sure that you examine all aspects of it, including how much your total expenses would be, how many years you would need to pay off your mortgage, and whether you can refinance it in the future or not.  


Your decision to pursue a home loan despite your bad credit depends on many factors, but mostly your preferences. There are many ways to still secure a home loan if you keep looking for opportunities. 

However, make sure that you are getting into terms that would be beneficial to you. If the option does not sound like a good deal, perhaps waiting until you improve your credit score would be a better choice. You can always change your credit score by cleaning up your credit report, saving for the deposit, or finishing your balance. Weigh the consequences properly and choose an option that feels more comfortable. 

If you need to apply for a loan with bad credit, we can help you. Wealthy You is Sydney’s best mortgage broker. Let us help you find alternative financing to get the mortgage you need to purchase your home. Contact us today at (02) 7900 3288.