In the recent years when housing prices were going up and up, banks were willing to give home loans to people even if they had bad credit, because the equity in the home would make up for the risk involved. It appeared that home prices would keep rising, and so banks kept lending and making commissions on the money they lent out. As real estate became more and more profitable, builders built more and more homes.

Unfortunately, they built too many in too short a period of time. What followed was this mortgage crisis which everyone is talking about, and which we are still affected by. Since there was an excess of houses on the market, prices began decreasing again. At times, some people had a mortgage loan that was greater than the value of their house.

Through these so called boom times, people who had bad credit were given loans, but these loans typically had a very high interest rate. Occasionally the rates were low at the beginning, but became higher over time. Because the home loan was more than what the house was actually worth, people couldn't sell their houses, and since the payments were increasing, they were forced to keep homes which they could no longer afford.

Then individuals started defaulting on the mortgages they had taken out. Their properties were foreclosed on and were repossessed by the banking institutions which wrote the loans on them. An ever-increasing number of residences flooded the housing market, sending values down and leading to a realty "bust" which is still plaguing us at the current time.

It's getting harder and harder for people with bad credit to get a home loan. In the wake of the mortgage meltdown, lenders have gotten stricter and stricter about who they will lend money to. Even people with good credit are finding it more difficult to get a loan, or to get one with good terms. During the period where home prices were rising, many mortgages were given with little to no money down. This made it easy for people to get a loan who couldn't afford much up front, but those days are now over.

It is still possible for someone with bad credit to get a loan, but it will probably require a much bigger down payment. In some cases a bank may require twenty five or thirty percent of the price of the home in order to grant a loan. You can shop around and compare mortgage lenders to find out who will give you the best loan with the best terms.