What do you mean by "not so good credit"? If your credit is 620+, then you can go for FHA loan... Some lenders can work with a score less than 620 but then they can charge higher interest rates and it will require more down payment... And if you want to go with a conventional loan, then you must have a score of 680+ for decent rates... So, if your score is less than 620, then work on your credit score if you want decent interest rates...

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Hi Alisha,

If you will be using an FHA loan, I would highly recommend your very first step be a "formal" FHA Pre-Approval if you desire accuracy in knowing your total costs upfront and what you can afford. There is a big difference between a Pre-Qualification and Pre-Approval. If you are looking for accuracy void of surprises you want to be Pre-Approved, not Pre-Qualified. For the differences see: http://www.Steven-Anthony.com/default.aspx?pp=39377

Via the Pre-Approval process you will know exactly what you can "technically" afford based on current interest rates. Then, it's up to you to decide how comfortable you want your payment to be by reducing your target sales price or increasing your down payment. MOST IMPORTANTLY, the Pre-Approval makes you aware of any issues that will prevent you from buying when you want to.

As part of the Pre-Approval you should also ask for a Good Faith Estimate (GFE) to identify all of the costs in purchasing your new home based on the determined Sales Price from the Pre-Approval. The GFE should include all third party costs (title, escrow, insurance, property tax, appraisal, inspections, etc.). With all of this information in hand you should then identify a Realtor who understands the nuances of how to write offers and manage a FHA loan based transaction. Purchase strategy starts well before an initial offer is made when using an FHA loan.

The safest plan would be to start looking as soon as your Pre-Approval is complete because rates are in a constant state of change. A Pre-Approval is a snapshot in time based on the rates available on the day the Pre-Approval is completed.

A FHA loan is a smart way to buy in this market. FHA loans are not difficult to get, sure, they sometimes require slightly more documentation depending on an individual's situation; however, the program's benefits far outweigh this.

Here is a list of key benefits:
1) 3.5% minimum Downpayment.
2) Up to a 6% Seller Credit allowed for buyer's closing costs and Seller concessions (non-FHA max is 3%).
3) FHA requires that identified safety/health issues be corrected.
4) FHA allows up to $8,000 in financed energy efficient upgrades without negatively affecting borrower's debt-to-income ratio.
5) Cash reserves not required.
6) Upfront Mortgage Insurance may be financed.
7) Non-occupying co-borrowers are allowed.
8) High and flexible qualifying ratios.
9) FHA loans are assumable.
10) No pre-payment penalties.
11) Will consider "compensating factors" in determining whether a loan should be granted.
12) Only a minimum credit score of 620 required.

I have an excellent FHA Loan Specialist referral for your Pre-Approval if you need one.

Best, Steve

I have worked with a lot of professional FHA lenders that can inform you of your FHA options. Look into them.

Alisha,

FHA is probably going to be your best bet.
They are more flexible and allow lower FICO scores if you have other compensating factors such as: solid employment, down payment on the bank, or not too much debt.
You may want to have some one run your credit to see where you stand. The credit report can be review for accuracy to see if some of the items being reported can be removed.

Call me if you need help with this.