The economy has taken its toll on nearly everyone. More people are facing foreclosures and bankruptcy than ever before. Banks have gotten tighter with their money, making it more difficult to get a loan, especially if one already has bad credit. Still, it is the dream of many to own their own home. The good news is that first time home buyers with bad credit can get still get financing.

Admittedly, it is much easier to secure mortgage financing if one has an excellent credit score. However, there are lenders out there and government programs available that can help even those with bankruptcy in their credit report to secure financing and buy their first home.

There are several federal mortgage programs such as FHA, that exist to help those who desire home ownership to attain that goal, regardless of credit history. Often these programs permit lower down payments and carry lower interest rates than traditional mortgages through banks and other home lending institutions. Of course, the down side is that they are much stricter about making payments on time to avoid foreclosure.

There are HUD funded housing counseling agencies in most cities that are happy to assist first time home buyers in locating a home and securing financing to make the dream of ownership a reality. These agencies can usually recommend lenders that are more amenable to dealing with those with bad credit.

Many banks will still consider making a mortgage loan to individuals or couples with bad credit under certain conditions. First, if there is a bankruptcy in their credit file, it should be at least 4 years old. In addition, there should be some form of positive reporting in that period, such as making payments on time for a major credit card.

Those with less than perfect credit can expect to be required to come up with a much larger down payment on a home than someone with a glowing credit report. The purpose of this is having the buyer build up enough equity immediately that walking away from the mortgage is not a valid option. It also goes far toward showing the lender that you are serious about owning a home.

Another penalty that must be paid for having poor credit is in the form of higher interest rates. Depending on just how low a credit score is, interest can be up to 10 percent higher for those with bad credit than for someone with a good score. Sadly, this makes paying the loan more difficult because payments will be higher each month. It also results in having to pay tens of thousands of dollars more over the course of the loan.

One item that can provide some relief in the area of obtaining a mortgage is having a piece of real property that goes with the home. Many banks will look on this with favor if the property is placed as collateral along with the home.

Owning a home is a dream shared by millions of people. For those with bad credit, it is a harder dream to bring to fruition, but not impossible in the least. It only takes a little extra legwork. A first time home buyer with bad credit can get financed and make the dream a reality.