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.

Shop Around

The best advice for borrowers with less than perfect credit that are looking for a home equity loan is to shop around before making a decision. Because the loan is secured, you should receive a reasonable interest rate, even with less than perfect credit. Get quotes from companies that do not require a credit check in order to give you a quote. It affects your credit score negatively every time you initiate an inquiry on your credit report, so apply for no more than the three best quotes you receive. Many internet databases offer quotes from several companies with only one information form.

Compare Interest Rate and Loan Terms

When comparing quotes, you'll need to look at more than just the interest rate. Compare all of the terms of the loan: the closing costs, interest rates, late fees, etc. Also pay careful attention to the repayment plan. Some home equity mortgages advertise low monthly payments. However, these plans generally only require you to pay the amount of interest you've accrued each month. You will be responsible for a balloon payment at the end of the life of the loan—the entire original amount borrowed.

Base Your Loan on Your Ability to Pay

Make sure that your home equity loan is based on your ability to repay it rather than the amount of equity you have in your home. Because you are using your home as collateral, you will want to make sure that you can afford the monthly payments.

Our Recommended Bad Credit Home Equity Lenders: See below for the Most Reputable Lenders:
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  When applying for a bad credit mortgage loan, make sure you are current on your existing credit lines. You will want your current credit to be as good as possible.

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.