Can I Get A 80/20 Loan With Bad Credit?

An 80/20 loan will help borrowers get into a home without any money down. It is designed as 2 mortgages, one with 80% of the home loan, and the other with the 20% that would have served as a down payment. This type of loan can be dangerous and risky if the financial situation is not solid. Bad credit doesn't provide a solid, stable, financial ground to stand on, and this is a major reason why financing is harder. Lenders will run a credit check to determine if a person qualifies for a sub-prime mortgage, and when lenders don't see a certain credit score, they will not extend credit to the borrower.

Because of the fact that an 80/20 loan is two separate loans, many lenders view these situations as high risk, because it damages the debt to income ratio. Without a high credit score, it is hard to justify getting in a home with no down payment this way. If am 80/20 loan is something one is interested in, he or she should first focus on placing his or her funds toward cleaning up their credit report. The better the credit the lower the interest rate.