If you have a credit score under 500 and need to secure a loan there are a few, but very limited options availible to you as a borrower. Many mortgage lenders will not lend to a borrower with a 500 credit score.
Some lenders will value the Loan to Value ratio greater than your credit scores. With these low ratios, having a credit score under 500 is possible because the risk is mitigated by the equity in the property.
Loans with credit score under 500 are not available in all states. Check with a mortgage professional specializing in credit scores under 500 for more information about which states may be eligible.
Most lenders will require you to put together an extensive letter explaining how you got into your credit situation. They will also want to see that you have been able to correct your credit situation.
If you have credit scores under 500 that is usually a definite red flag that a lender will not lend a mortgage to you. Most lenders make 500 their cut-off point as to where they stop lending. The reason being is because that consumers with credit scores below 500 will are much more apt to default on their loan, they have not shown a responsible credit history, and there are reasons why their credit scores are so low. If you have credit scores below 500 it is highly recommended that you try to repair your credit or work with a credit repair company to improve your credit scores and get them back over 500 to open up a few more lending options that may be available for you.
Loans with credit score under 500 will depend on the amount of equity you have in the property for a refinance and the amount of down payment you can provide on a purchase. The loan to value for borrowers with credit scores under 500 are usually limited to 65% of the homes value or purchase price.