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CAN I GET A MORTGAGE TO BUY A HOUSE WITH A FELONY?

October 28, 2022 by An educated felon No Comments

One of the ultimate grown-up decisions and overall major purchases in your lifetime would be that of buying a house. It has always been considered a sound investment, but more than that, it is your home. It’s a place where you should feel safe, secure, and at peace when resting. For the plight of the lowly convicted felon though, you feel anything but, when thinking if you are to be excluded from yet another opportunity – in this case owning a piece of the American Dream.

There are two options one has when they want to purchase a home: they can pay cash or secure financing by way of obtaining a mortgage.

There are key differences with mortgage financing, such as loan product available (different types of loans) and intended use (primary residence where you will live versus an investment property that you will resell), with all having different qualification standards.

In respect to that, yes, a convicted felon can absolutely get a mortgage to purchase a home. More often than not, traditional lenders do not generally conduct a criminal background check on a mortgage applicant. Therefore, there is a good chance that your lender will never find out about your criminal history.

So, the good news is that banks usually do not check criminal histories before approving mortgage loans. The bad news, however, is instead they are going to focus on the applicant’s financial profile.

IS IT HARDER TO GET FINANCING WITH A FELONY CONVICTION?

In order to obtain mortgage financing, you will need to provide the lender with a set of documents that make up your financial profile. They will need to pull up your credit report, obtain tax returns, verify your income, and proof of residency going back so many years.

Having a felony conviction is undoubtedly going to impact your life in so many ways, and unfortunately, your financial affairs may take a big hit and be in a state of chaos due to this. Bills mount up while incarcerated, and a convicted felon will find themselves deep into debt by the time they have completed their sentence, frequently resulting in bankruptcy.

Adding insult to injury, an ex-offender will struggle to obtain steady employment and residency, all while still having to explain gaps in history for both due to incarceration. Credit scores are often quite low as a result of all these hardships.

If you have a good credit score and a felony conviction, the credit score is going to make a huge difference in your life. Work hard to obtain (and maintain) a good credit score so you can get a home loan regardless of your criminal history.

WHAT WOULD IT COST TO GET FINANCING IF YOU HAVE A FELONY CONVICTION?

For those with less-than-desirable credit scores, fret not, as you may still qualify for a home mortgage, felon or not. There are many loan products available, including loans that will cater to someone (re) establishing their credit, however, the lender will look to minimize their risk by increasing the interest rate at which they lend you money, ultimately costing more for the consumer.

Yes, a felony conviction does not directly affect obtaining a mortgage, but indirectly it has a profound impact on one’s life where the collateral damage is felt and seen on your finances, thus affecting your ability to obtain a mortgage.

How do I get a mortgage with a felony conviction?

Felon or not, you must still be prepared to answer any questions and gather all documents necessary for securing a loan/financing, which generally includes:

Credit report

Income tax returns for the past two years
W2 / Wage statements from your employer for the last 2 years
Last three months bank statements

Verification of rent
A letter explaining any issues that need clarification on your finances (such as why something went into collections and/or something negatively impacting your credit score).

You must also save money for down payments. You must focus on maximizing your credit score. This applies to anyone looking to purchase a home, felon or not.

Conclusion

Many felons believe that their lives are over once convicted. That is a matter of opinion, and not a fact. Yes, a felony conviction is going to turn your life upside down, however, you do not need to let it ruin your life. If you’re willing to work hard, you can overcome any and every obstacle you encounter.

Suffice to say, you don’t need to let a felony conviction stop you from buying a home, as obtaining a mortgage is really more dependent on your financial history and not your criminal history.

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