I want to get a mortgage but been refused as i dont have credit?

i would like to get a mortgage but i have been refused due to bad credit - i have 1 default thats it! my problem is im trying to build a credit rating for myself as i dont have 1 im only 19! are there any companys that you know of that will accept me...preferably a 70/30 mortgage? thanks

Before the sub-prime fallout, an LTV of 70% (assuming that the other 30% is going to be down payment) would have been pretty easy to do with a good work history and a DTI below 50% (DTI = debt to income). Now with subprime on the ropes and closely scruntinized, without decent credit, it is nearly impossible to get a mortgage loan without going hard money.

Your best bet is to make sure the default has been satisfied and is not an open collection, try to get added to someone's VISA (or another major credit card) as an authorized user, and try to open up a couple of store credit cards (easier to do once you have a major credit card in your name). Take the time to build up your credit score over the next two years. The price of houses should not be higher in two years than they are today and if anything, you might see prices lower in two years than from today.

THe only other option would be to try FHA which doesn't look at score but rather the whole credit history which may include other forms of credit such as utility bills, insurance payments, rent, etc. Types of credit which do not show up when calculating a FICO score. I used to do FHA loans as a loan officer years ago but the FHA market pretty much went out the window over the past 4-5 years in California and is only now making a slow come back. So I recommend that you talk with a loan officer who specializes in FHA loans and would know the current and up to date guildelines.

Good luck!

EDIT: And Supercactus (the answer below mine) is a great answer! I have a friend who did that and got a great deal on a house, it building up his "rent" history, building up a down payment, and is no longer just throwing money away.

Look for a "rent to own" deal. This will be a lease with an option to buy. Ask that a portion of your monthly lease payment be applied to the purchase price of the home when you reach the point of buying.

In many markets there are homeowners desperate to sell and they will consider unusual offers.

What is your credit score?

Building a good credit history will take a couple years.
1. Get a couple small credit cards, <$1,000. Use them and pay them off.
2. Buy a cheap used car and don't miss a payment. Pay it off.
3. Rent an apartment for a couple years. Don't get evicted.

Why would you want to buy a house at 19 anyhow? If you fell into a pile of cash or something, go to college.

I found Morgage House was very good with helpful ways to get on track with the credit rating. we eventually got a 100% home loan approved for $300,000, but it did take 6 mths

Magic, try finding a co signer. Also get a charge card. Capital, Pennys, etc.. to get things going.

the best thing you could do to get your credit rating up is take out a couple of credit cards but make sure u cut them up so your not using them. this automatically goes on yuor record and even if you dont use them shows you have a card and have good credit. As for a morgage go to the local estate agents and see what they sugget is your best option.

Everybody's posted their answer, which have some valid points, but now I'll post mine.

First, you should know what makes up your credit score:

1. Payment history- 35%
2. Total debt owed to avialable credit ratio-30%
3. Length of time establishing credit-15%
4. Types of credit established-10%
5. Inquiries and New accounts-10%

Now, with that said, I'll explain why you're not able to get a mortage.

You said that you have one default. More than a в…“ of your score depends on how well you repay what you borrow. So that 1 default is deadly to your score. Also, being that you're 19, at best the longest you would have been able to been building credit for would be a year, and 15% of your score depends on credit experience. This is my suggestion for you:

1. Open a checking account- While opening the account doesn't directly build your credit, it does create a relationship between you and the bank by being an accountholder. Banks love to cater to their preferred customers that have accounts in great standing by offering loans and credit cards. Also, having a checking account not only helps manage your money, but it gives you the most powerful tool in building credit, a checking account to help pay your bills on time. Most banks and credit unions offer online banking with billpay that can make it easy for you to pay your bills on time, which is important in building credit.

2. Open a secured credit card- Secured credit cards are the easiest credit cards to get, mainly becuase a security deposit is placed upfront in order to establish a line of credit in the same amount. For example, if you deposit $250, your credit limit is $250, and so on. The deposit isn't used to pay for any of the purchsases on the card unless, it was charged off and sent to collections, so you would have to repay it just like a regular card either in full or minimum monthly payments. The deposit is sometimes linked to a savings account, so it earns interest while you're building credit, so the deposit isn't sitting there. You can think of this as building credit with a savings account. The more you deposit, the higher your limit, which is good for your score because it creates a cushion between the total debt you owe and the credit you have available. Also, by continuing to add to the deposit, you're also creating an emergency fund at the same time. A good way of using the card is by making small purchases ($20/month max) and paying on time every month while adding to the deposit. Usually after a year or so, the card either converts or upgrades to a regular card, and most importantly, the deposit is given back, which you can place in a savings account as an emergency fund.

3. Enroll with PRBC- PRBC is America's Alternative Credit Bureau, providing a helpful service to the over 50 million people with limited or no credit history. If you pay your monthly bills on time, PRBC can help you build credit to qualify for a mortgage and better interest rates.On-time payments for the following bills are not reported to the traditional credit bureaus:

Rent
Cable
Phone
Daycare
Insurance
Electric
Natural Gas
Cell Phone

The only time your payments for these bills are reported to the other credit bureaus is if they're missing or late.With PRBC, your on-time payments count. You build credit for paying your bills on time, even if you have no credit history. PRBC offers two simple ways to start building credit today.

Smoovy Loco mentioned PRBC already, and he's right on. Here's a link to their mortgage page - http://prbc.com/consumers/how/mortgage.php

If you've paid rent and 3 bills (cable, internet, phone, cell phone - pretty much any recurring bill) on time for 12 months, PRBC can probably help you qualify for a prime mortgage. There are FHA programs available where you can put very little money down and get a house. I believe some FHA loan programs have 100% financing options still available. If you call PRBC, they can help you out with that.

If you don't have 12 months of on-time payments, you can sign up with one of their bill pay partners and have your payments reported to PRBC automatically as you pay bills - which will build your credit file with them. Soon, you'll be able to go for the home loan you want using that credit file.

Good luck!

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