The American dream is to own your own home and why not. A home is solid asset that (usually) will only increase in value with time. If you have had bad financial situations hit you in the past you know that getting a mortgage for bad credit can be almost impossible. Everywhere you turn seems to point to denial after denial. Of course it doesn’t need to be this way and while your bad credit score can impact your ability to get a mortgage, lenders look at other factors as well. So, by improving the overall picture you may be able to get approved next time you apply for a mortgage for bad credit.

Lenders will naturally consider your credit score, but other factors they look at include your income, your expenses, the value of the home you’re trying to buy, your current debt load and the down payment amount you are offering. If you’ve been hit with bad credit then some of these other factors may actually help you to get approved for a home loan.

First of all, start saving your money. The bigger your down payment the more likely you are to get approved for a bad credit mortgage. In fact, as you’re saving you can also work on improving your credit score so by the time you have a suitable down payment your credit score may have increased dramatically and you may not even be looking at a mortgage for bad credit any longer. A large down payment means a lower loan amount and decreased risk for the lender which equals higher approval rates and lower interest rates for you. When you save more money for a down payment it’s a win-win-win situation for you.

Another way to help your approval is by getting recommendation letters from your current landlord. If you rent your ongoing rent payments will not be included in your credit score, but a letter from your landlord stating you have been on time with payments for the past two years could be enough to tip the scales in your favor. You should also consider getting a credit card and using it if you don’t already have one. By using the card and paying it off regularly and on time you’ll help boost your credit score.

If you’re a first time buyer that helps too. Many lenders have special programs for first time house buyers that can get you a mortgage even if you wouldn’t normally be approved because of bad credit. There are also loans available for first time home buyers with little or no credit history. If you’re considering buying your first home you should take the time to speak with a mortgage broker and find out all you can about loans for first time buyers.

By getting prepared for the step into a mortgage you can greatly improve your chances of being approved and also of getting a lower interest rate. If you have little to no credit history you can make up for this by showing stability in other areas. Lenders will look for a checking account, employment and residence at the same place for the past two years. If you can show all three you’re in the right direction for having your mortgage approved.

Those of you with past credit issues and current bad credit may have a harder time as you present a risk to the banks and mortgage companies that approve the loans. Do all you can to clear any negative items on your credit report, improve your credit score and raise your savings to have a bigger down payment. All of these things combined can make the difference between getting declined or approved for a mortgage for bad credit.