In 2012, securing a California home loan with less-than a 620 qualifying credit score(s) or a recent history of short sale, foreclosure, or bankruptcy isn't easy. You have a few options, however, but please read the following information before calling or inquiring online.

Conventional (FHA) Financing

FHA financing -- If your qualifying (middle) credit score(s) are between 581 and 619 and you are seeking to purchase a primary residence, you MAY qualify for conventional FHA financing provided you meet the requirements below. If your score(s) are LESS THAN 579, you need credit repair to increase your scores before applying;

* The property being purchased is intended for your primary residence (second homes, vacation, and investment properties do not qualify);

* The loan amount is within FHA's current loan limit guidelines by county in which the subject property is located. You can find the maximum FHA loan limit by county at HUD's website. You do NOT need to know the county code, MSA name/code, Limit Type (leave at FHA Forward). Simply input the name of the county where the property you're purchasing is or is likely to be and make sure the Limit Year is set to "CY2012" and hit the SEND button. The maximum FHA loan limit for that county will be displayed by the number of units of the property.

* You have 3.5% - 5% cash down payment, or a "gift" of the down payment from a family member;

* You and any co-applicant(s) are employed for 2 consecutive years and have sufficient income and the proper debt-income ratio to qualify for FHA financing in the amount you're seeking;

* It's been three years or longer from a previous short sale where there were late mortgage payments leading up to the sale (it doesn't matter if the bank told you to skip payments);

* You had a short sale within the last three years but had NO late mortgage payments leading up to the sale date, AND you are purchasing a new property more than 50 miles from where the previously short sold home was located;

* It's been 3 years or longer since you had a foreclosure OR a Notice of Default as shown on your credit report;

* It's been 2 years or longer since the DISCHARGE date of a Chapter 13 or Chapter 7 Bankruptcy, AND you have reestablished good credit, AND there are NO late payments after the Bankruptcy was discharged;

* There are NO current delinquent accounts, or open judgments against you;

* You currently do not have more than 3 other financed residential properties on your credit report(s)

* The qualifying loan program is the standard FHA loan, and not the 203(k) version (which is for renovating property)

FHA loans with less-than-ideal credit are possible, and are mostly manually underwritten. If you do not qualify for FHA financing based on credit history, lack of sufficient income, or other reason you'll need to restore your credit and score to qualify in the future.

We can accomodate California property FHA loans that meet the above guidelines PROVIDED the loan amount is $250,000 or more.

Repair / Restore Your Credit First
This is my # 1 suggestion for those with poor - bad credit seeking a home loan: FIX your credit, or establish GOOD credit. Then apply for a home loan. The number of people who meet all of the above guidelines for conventional FHA financing is very small. The success of credit repair depends entirely on the credit history, and new credit takes time to positively affect your scores. We can recommend reputable credit repair companies we do business with regularly by request.

Other Options For Poor Credit Home Loans

Hard Money Loan -- this ONLY works if you have 40% or more cash down payment (after points, fees, tax impound, etc), can qualify with documented income at a 50% or less debt-income ratio using an interest rate that's nearly twice that of a conventional loan, and can live with a much larger down payment until the loan can be refinanced into a traditional bank loan. Hard money in this arena is usually reserved for those who have very substantial cash reserves and income, who can qualify for the payments, and who have a viable means of qualifying for conventional financing in the near future.

Seller Carried Financing -- this ONLY works if the person you're buying from owns the home outright, and who would be willing to carry the financing for you until you're able to qualify for a traditional loan. This option is extremely rare -- most properties are encumbered by a loan(s) and the seller generally seeks to be paid the equity in the property rather than receive interest on it for an extended period of time.