It is a common misconception, as well as, an unfortunate belief, that one must have absolutely perfect credit to get a mortgage. To be sure, having perfect credit will get you the best deal. If you have no flaws on your credit report, you’ll get the best interest rates, lowest closing costs and “points”, easy qualification, and mortgage lenders and brokers sending flowers to try to get your business.

But not everybody falls into that category. People go through periods of unemployment, divorce, or illness. The family car may break down at the same time the credit card payment is due, so it gets sent in a couple weeks late. No matter how well you plan your finances, almost everybody faces some sort of unexpected expense, and many of us have to make hard decisions and let some things slide. It doesn’t mean you’re a bad person. You may no longer be the bank’s best friend, but you don’t have to be left out in the cold.

Lenders who specialize in poor credit mortgages may have different standards, so if you get turned down by one, don’t get discouraged, you still have a good chance at finding a lender who wants your business.

These types of lenders don’t go strictly “by the book” like a conventional lender, who approves loans largely based on a formula based on your FICO score. A subprime lender will certainly look at that score, but will also consider your overall credit history, recent trends, and explanations you may have for periods of tardiness. The lender will also look at your job history and ability to generate income. Lastly, the lender will look at the equity situation; that is, if you want a second mortgage, they will want to see substantial existing equity in the home, if you are buying a new home, they will want you to have a substantial down payment.

The subprime lender is more willing to make allowances for individual situations, and may be more willing to make a loan even if you are not strong in all three of those areas. For this reason, if you have a good down payment and a steady job, but a spotty credit record, you may still be approved.