Also, make sure to include all the income you have. If you have any equity in any stocks or other financial accounts, make sure to mention that to the broker as well.

The more money you can put down on the loan, the more likely it is that you can get approved. FHA loans usually only require 3-5% down. They are also usually open to working with people with credit problems.

Why lenders care about your credit history

Giving you a home loan is a big risk. That’s a lot of money for lenders to fork out. And, mortgage lending is part of a business. it's not just the money they give you that lenders want back; they want to make money from the interest payments you make. This is where credit comes in. Lenders check your credit to see how big of a risk you are. They want to know how likely you are to default on the home loan, leaving them scrambling to find a way to recoup some of their losses. If you have a good credit history, you are less likely to default, and they will offer you a lower mortgage interest rate, knowing you will probably pay the entire amount back. Bad credit means they charge higher interest rates, meaning you make higher payments, ensuring that they get as much money back as possible before default.

Things you can do to improve your credit score

Getting the best mortgage interest rate possible can be done if you take steps to improve your credit score and strive for a good credit history. Here are some things you can do:

·     Pay all of your other loans on time, and pay at least the minimum
·      Make sure your bills (including rent) are paid on time and in full
·      If you can't make a payment, be sure to call your creditor or the company to whom you pay the bill and work something out
·      Do not default on your student loans
·      Live within your means so that you do not acquire more debt than your income can handle
·      Avoid bankruptcy unless it is completely unavoidable

With a good credit history, you can ensure that you are getting the best mortgage interest rate when it comes time to take out a home loan.

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The average rate of interest on mortgage loans continues to fall and has been under 5 percent for almost all of this past year, with this recent round of rate cuts seen as the lowest for borrowers in years. The reason, many borrowers today have bad or at least less than perfect credit scores. Still a borrower with less then perfect credit an jump through a few hoops and get a fairly decen rate on a loan.