There are three major factors that determine what kind of loan borrowers with poor credit can get. The first is the size of the loan they are looking for.
Mortgage lenders that handle bad credit loans usually will loan only at a lower LTV and require housing payment history. This history along with credit score will determine the amount they will lend to the borrower.
Mortgage lenders who borrow to people with bad credit are called Sub Prime mortgage brokers/lenders. A mortgage for a borrower with bad credit will carry a higher interest rate then a mortgage for a borrower with good credit. Recently Sub Prime rates have increased due to the increase in sub prime mortgage loan default. If you need to secure a mortgage loan for bad credit think of it as a temporary band aid loan until your credit score increases.
Another factor in determining what type of mortgage loan you can get with bad credit is your Loan to Value.
Be sure to review your own credit report to make sure only accurate information is being reported. Many times inaccurate information can be removed to improve your financing terms.
Documenting income is very important to a lender when you have very bad credit and are applying for a mortgage. If you need an alternative income documentation loan, this will make it harder to qualify for a bad credit mortgage, may possibly lower your loan to value that you qualify for and will most likely increase the interest rate that you will qualify for as well. Therefore, if you can document your income through traditional methods this will increase your chances of obtaining a mortgage loan with bad credit.
When working with mortgage lenders, damaged credit experience counts. If your mortgage professional isn't experienced then several things can go wrong. Damaged credit means there are less lenders that will be willing to make a loan. If your mortgage professional isn't seasoned then you might qualify for a loan and be told there's nothing out there for you.