100% Bad Credit Principle Residence     

This load is definitely the way to go if you don’t have great credit and you want to finance your principle residence at 100% of the value.

Loan:  This loan includes a 1st and a 2nd mortgage.  The 1st mortgage is an 80% LTV fully amortized 30-year mortgage with a 20% LTV HELOC 2nd mortgage.

Qualifications:  To qualify for this primary residence loan, you must have a FICO score of at least 580, have 2-3 months of monthly income reserves and be able to provide income and asset documentation.

Review:  This could be one of the best loans for those with less than perfect credit but it does have a few drawbacks.  The rates for this loan are not as good as some of the other loans available and you must provide full income documentation.  This includes two months of bank statements, two years of W-2s or the two most recent years of taxes and you must prove that you have at least 2-3 months of months living expenses.  If you have less than a 580 FICO, then you might be looking at a sizeable down payment or seller financing.

5.  Fixed Payment Option Arm

This loan is extremely difficult to obtain but it could be one of the best loans for keeping your payments down and your cash flow maximized for five full years. 

Loan:  This is an 80% Option Arm mortgage with a fixed minimum payment for 5 years.

Qualifications:  To qualify for this loan, you must have a FICO score of at least 720, provide full documentation including impeccable income history and large amounts of provable liquid assets and have 2-3 months of reserves.

Review:  There are a few rules that we need to explain about this type of loan program.  First, this is an Option Arm, which means you will have the benefit of keeping your payments at a minimum with a negatively amortized payment.  However, at the end of every year, the lender reserves the right to increase your minimum payment by no more than 7.5% of the original minimum payment in order to offset the negative amortization of the loan.  The loan will then stay fixed for one more year with the possibility of increasing another 7.5% the next year, based on market interest rates.  There is also a chance that your minimum payment could stay the same or decrease in rare cases, but as a general rule, negatively amortized payments will increase over time, however this increase is a small price to pay for the incredibly low payment for 5 full years.  The catch with this loan is that it is extremely hard to qualify for and to pass through underwriting.  Even with perfect documentation, you are looking at an average of 3 months to close of this loan.

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