You might have suffered a job loss, divorce or family medical issues which caused your credit to suffer. Is your past is behind you and you are now working and have saved money for down payment and reserves? Reestablished your credit in last 2 years? If the answer is "Yes" to these questions, you might be ready to purchase a home.
What do you need to prepare yourself?
Mortgage or Rental history must be 0 x 30 in past 12 months.
You need to explain what circumstances caused your payment and credit issues. The letter of explanation should be 1-2 pages in length with supporting documentation (job loss, medical illness, divorce, etc). Also, include the steps you plan to take to avoid falling into the prior derogatory credit issues you faced in the past.
Pay off any court-ordered judgements, disputed credit accounts or collection accounts prior to closing. Disputed credit accounts or collections resulting from identity theft, credit card theft, or unauthorized use will be excluded (must provide police report to dispute the fraudulent charges).
One programs is the government FHA loan enables buyers to purchase a home with as little as 10% downpayment. As the buyer, a minimum downpayment of 3.5% of the home purchase price must be from the buyer(s) own funds. Closing costs can be a gift from an immediate family member, relative or seller. An FHA loan requires upfront 1.75% mortgage insurance which can be financed in the mortgage amount. You must not be late on any federal loan debt. Any IRS payment plan must have three (3) consecutive on-time payments.