Applying for a loan with bad credit
If you have bad credit you will want to have as much cash as possible to use for the downpayment. Perhaps you can get a gift letter from a friend or relative and use that to put money down. If you can increase the downpayment then you will decrease the LTV or loan to value and therefore make the loan more attractive even if you have bad credit scores. Also keep in mind that your co-borrower’s credit score will effect the overall risk of the loan and so if you have good credit and your spouse has poor credit then your overall risk will be higher as you are applying jointly for the home loan.
Another idea is to get the loan now and pay a higher rate and avoid closing costs if possible. This minimizes your out of pocket expenses and allows you to put more down on the loan even though your interest rate is higher. Make sure the home loan doesn’t have a pre-payment penalty. Take the loan and then immediately work on your credit score. Once your poor credit has been repaired then go back and refinance the home at a lower rate.