How to Purchase a Home Through HUD With Terrible Credit

by Contributor ; Updated July 27, 2017
People with bad credit may be able to secure a home loan with help from the federal Department of Housing and Urban Development.

HUD, or the federal Department of Housing and Urban Development, oversees the Fair Housing Act. HUD is responsible for ensuring, among other things, that low-income families are afforded the opportunity to become homeowners. Often, low income families have less than perfect credit, which can make it difficult to get a home loan. You can buy a house through HUD with bad credit if you are diligent in your efforts

Step 1

Determine how much home you can afford to spend each month on a mortgage. Before you tackle the issue of your credit, use the Ginnie Mae home ownership calculator to determine how much of a mortgage payment you can afford to make. Find a link in the Resources section. You should not attempt to purchase something you can't afford; ultimately, you could worsen your credit and possibly lose your home.

Step 2

Apply for a federal mortgage loan with help from the HUD website. You can apply directly with a lender approved by the Federal Housing Administration, or you can speak with a HUD housing counselor. The HUD counselor can help you by showing you the best options available for you based on your credit situation. You can find a listing of FHA lenders based on the criteria you specify or you can contact a housing counselor by using information provided by HUD on their website.

Step 3

Research government options. The government offers different programs for different circumstances, such as home ownership programs through the Veterans Administration or Department of Agriculture. If you are a candidate for either of these programs, visit the agencies' websites for details on how to apply and what is required.

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