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Not long ago, when property values were on the rise, lending institutions were eager to make home loans even to those individuals with poor credit histories, since a home's equity would cover a loan in case of a default. It seemed that this would simply go on forever, so lenders kept encouraging borrowers and raking in commissions for the loans they wrote. At the same time, since properties were becoming more and more valuable, more and more new construction was taking place.

Unfortunately, too many homes were built in too short a time, saturating the market. This led to the "mortgage crisis" that continues to impact our economy. Too many houses on the market lowered prices drastically; some homeowners found themselves with a mortgage loan that was larger than the value of their house.

During these boom times, people with bad credit were given loans, but these loans often had high interest rates. Sometimes the rates started out low, but then increased as the years went by. Since the home loan was more than the worth of the house, it was impossible for people to sell, and because the payments were going up, they often were stuck with homes they could not afford.

People began to default on their loans, and their homes went into foreclosure, where they were taken back by the bank who gave out the mortgage. This led to more and more houses being put on the market, which made prices go lower, which led to a vicious cycle that we are all still feeling the effects of today.

Nowadays it has become extremely difficult for people with bad credit to obtain a home loan. With the onset of the mortgage meltdown, lenders have gotten increasingly stricter about who will qualify for a loan from them. While up until recently people with good credit would have had no problem getting a loan, they now are experiencing not only difficulty in obtaining a loan but in getting one with desirable terms. While home prices were rising over recent years, many mortgages were approved with little or no money down. These conditions made it much easier for people who did not have substantial assets available to get a loan but now those times have come to an end.

It is entirely possible to obtain a loan, even with bad credit, however, you are likely to be required to put more money down on the loan to begin with. Sometimes the bank may require a down payment of as much as thirty percent in order to give final approval on a loan. You can compare mortgage lenders to discover who has the best loans with the best terms.