Terri,

You may be able to get an FHA mortgage. They are willing to look at explanations for poor credit and not just the scores. Contact a lender who does alot of work with FHA and see what they can do for you. A score in the 500s does not neccessarily mean you can't get a loan.

1099 income is treated by banks as self employed income - it is not the gross amount listed on the 1099 but the net amount - usually listed on schedule C of your tax returns - of income which is used to qualify you. My original advice still stands. Except gather your last 2 years tax returns with all schedules attached (must include filed tax returns for 2008). Meet with a bank - or two or three if necessary. It is true that not everyone will qualify for a mortgage today. But if you are dealing with the right bank you may find what you can not accomplish today can be accomplished in a relatively short period of time.

If you credit score is in the 500s and your income comes from a 1099, normally nobody wants to deal with you. We have a 1099 with $93,000 reported, yet we were told we must improve our scores first. We rent and pay almost $2,000 a month NEVER LATE, and yet because we had a major setback in January 08, we are frowned upon. I guess this is the reason my question was so general.

Your question is too general to be answered correctly since your definition of "bad" credit may not be the same as a bank. My advice would be to gather your income docs ( w2 forms for 2007 and 2008 plus pay stubs to this year, last 2 months bank statements where you have monies (checking account, savings account, CD, etc.) Then contact a REPUTABLE bank to meet with you, run a credit report and together with your docs, should be able to pre-qualify you for a mortgage. Based on your income, you will know the mortgage amount you qualify for. Based on the monies you are able to SPEND, you will know what purchase price you can afford.

Terri,

In general, yes. Having said that - talk to a lender first. I've had lots of buyers who thought their credit was bad until a lender pulled and reviewed a credit report.

Ted Stewart, CRS, e-PRO
Yerman Witman Gaines & Conklin Realty http://www.TheBaltimoreRealtor.com

Buying a home now in the best buyers market we've had in decades is definitely a good decision. Obviously lending requirements have tightened. However, even with marginal credit you may be able to qualify for an FHA program or even utilize your states bond program (if applicable we have the bond program in Florida). Another alternative is to find a seller willing to do owner financing with reasonable terms, someone of course you've checked out, always work with a REALTOR, especially when seeking owner financing.