As of 2015, direct lenders for low-credit mortgages include Carrington Mortgage Services of Santa Ana, California, and Silverton Mortgage Specialists of Atlanta, Georgia, reports Bankrate. Skyline Financial of Calabasas, California, and Well Fargo bank also offer low-credit mortgages, adds CNN Money. Although lenders serving borrowers with low credit typically charge high interest and ask large down payments, borrowers can refinance once they demonstrate their reliability.
Borrowers with low credit scores obtain loans that the Federal Housing Authority approves and insures, explains CNN Money. To protect borrowers, the Consumer Financial Protection Bureau puts safeguards in place such as controls on interest rates and penalties. The Bureau also insists that low-credit borrowers receive counseling that the U.S. Department of Housing and Urban Development approves on the responsibilities of homeownership.
When considering loans to those with low credit, lenders look at criteria other than credit scores, according to Bankrate. Instead of relying on automated systems, they take close looks at individual cases. For instance, they assess the validity of reasons for low credit scores such as job loss, student loans and emergency medical bills. Borrowers are more likely to get loans if they can demonstrate regular rent and utility payments for a significant length of time. Having six months or more of bank savings also helps.