Bad Credit / Sub-Prime Mortgage for Owner Occupant

[Daryl Jarrett]

I know we are not allowed to use bad language on the forums, so sorry for saying "Sub-Prime Mortgage", but that is exactly what my client needs! I am trying to sell one of my properties in North East Philadelphia to the tenants who have been living there for over three years. There are actually related people who would be applying for the mortgage, their credit scores range from 510 to 575. Their combined house hold annual income is over $90,000. They pay $2,325.00 per month in rent and are current. The house that they are looking to purchase is a large single home and would appraise for about $280,000. My selling price with them is $259,900 and I am offering them $9,500 in seller's assist, and they have about $10,000 cash to put down. So far they have been unable to obtain a mortgage. So, my question is does anyone know of a "Bad Credit" or "Sub-Prime" Lender that operates in the Philadelphia, Pa 19136 area? Also, if the lender needs more "Protective Equity" do they allow the seller to hold a second mortgage?

Thanks,

Daryl

[Mindy Jensen]

@Daryl Jarrett , the credit system most frequently used is FICO, which runs from 300 to 850. The scoring is weighted toward the high end, though, so even 650 credit scores are still bad. You really have to work to get your credit down to a 500 score. 

These tenants have a high income and low credit. This tells lenders that they don't pay their bills, most likely live outside their means, and until they make big changes in their lives, they will continue to have bad credit.

Some lenders will go down to a 580 score, but that comes with a much higher interest rate.

I think you are being generous, trying to get help for these tenants. But they need to do some really hard work in order to be able to qualify in the future.