The credit score is just "one" of four factors that conventional lenders and FHA lenders would consider to make an overall credit decision on the borrowers:
1. Character (credit ... payment history
2. Capacity (Income ... steady and verifiable)
3. Capital (liquid assets ... down payment)
4. Collateral (appraisal value of the home you want to buy)
Find an experience FHA loan officer that "wants" to help you. Ask he/she to submit your loan request "manually underwritten" this means more work for the loan officer but he/she will be able to justify and provide compensating factors for your deficiencies (less than perfect credit history.) As long as you meet the bank's lending criterias - the 4 Cs described above, you and your husband may qualify for a mortgage loan.
Go here to learn more about FHA loan programs so that you will be well versed when discussing FHA loan options with your FHA lender...http://portal.hud.gov/portal/page/portal/FHA_Home
You can search for FHA lenders here...http://www.hud.gov/ll/code/llslcrit.cfm
Is your husband transferring due to being a military personnel? If yes, then you may want to consider VA loans...http://www.homeloans.va.gov/
Additionally, you may want to contact one of these government approved counseling agencies to help you with a plan to re-establish your financial profile, including home buyer education programs (which provide down payment assistance)...http://tinyurl.com/klc4ug
Next, begin rebuilding your credit. If you have current accounts with good payment histories, or even some previous late-payment-blemishes, make sure you continue to pay those accounts on time. If you do not have any existing credit accounts then you'll need to establish several in order to create a viable credit history.
I have found that CONSUMER ACTION is an excellent resource for objective advice on all things credit related. You'll find free and sincere advice on everything from settling collection accounts to rebuilding credit to building credit from scratch on their website. http://consumer-action.org/
Beware of anyone offering to "repair" your credit! The Federal Trade Commission issued a stern warning last year that such offers are scams. Find more from the FTC HERE. http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre13.shtm
The best way to buy a home is to have a decent credit history combined with sufficient Income and Assets for a home purchase.
The best way to have a decent credit history is to settle negative outstanding obligations and pay all your bills on time for at least two years.
I find it fantastic that you are researching and looking for answers to your problem. We have some great answers here and some really good lenders. First choice I would do is speak to a couple of Lenders and check out the programs that they have to offer. Our USDA is really good also but it is running out of money so I would do my checking with them quickly. If by chance you cannot go that way there are so many homes now on the market that are owners occupied and who wishes to sell that they will to carry a contract for 1 to 2 or even 5 years with a good down payment. So you have quite a bit of options..... I wish you the best. : ) If you have anymore questions I would be happy just to talk.
Depending on your annual household income, USDA may be a good option as well. I see FHA is mentioned and that is a good option. However FHA has a higher rate, higher fees and pmi. I would say it's a good backup but USDA is lenient on credit as well and has is an overall better program than FHA. Best of all, it's a zero down program and the seller can cover closing costs & pre-paid taxes and home owner's insurance. I can send you information on the program.
If you would like to see if you qualify for the program, we do not charge any up front fees. We are also offerring a 50% discount (visit http://www.ambientlending.com for details). You will also see daily rates posted there.
Ambient Home Lending
Lending Throughout oregon
Toll Free 877-777-9763
Amerivest Realty of Portland