You will have a very difficult time locating a loan with very bad credit. The best solution is to review your credit report and try to improve the scores to levels of 620 plus. If you have investors or family that can co-invest or loan monies to purchase cash, you can find some great buys in a lot of cities.
Once you get your financing together, you may qualify for Federal Home Administration (FHA), Section 203(k) loans that can incorporate your mortgage and rehabilitation expenses in one loan.
Homebuyers who purchase a property with cash can refinance the property using 203(k) within six (6) months of purchase, the same as if the buyer purchased the property with a 203(k) insured loan to begin with.
So, to take advantage of some of the great mortgage programs, you have to start by improving your credit score.... more
I don't know what the state high cost rules are off the top of my head but depending what those are, a 203k refinance after a cash purchase may not even be possible since the loan amount may/will be so small. These restrictions generally don't apply to a purchase which is why it's always a good idea to think this scenario through carefully before doing so or you may end up with a house you can't do anything with.... more
There are many programs available that might be able to help you. Your best bet is to speak with a lender and see what types of loans you qualify for and get pre-approved then you can speak with a realtor and work with them in finding the right home, in the right price range.... more
I didn't address your score question. There are FHA lenders able to go into the 500's if the rest of the file makes sense. Your down payment may be higher with lower scores. FHA in the 600's can be as low as 3.5%, but the lower scores may require 10%.... more
First, settle any outstanding debt. If you owe money on collection accounts, charge-offs and/or judgments, make payment arrangements and get these accounts paid promptly.
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.