California is associated with lovely scenery, mild to temperate climate and high housing cost. Renting a place here is a bit cheaper than buying a place. However the biggest drawback of renting is that you do not own any equity in the place. With the increasing real estate prices in California, you might want to own your home and take benefit of the escalation of the value of the home.

However if you are stuck with a bad credit and want to apply for a home loan at California home prices, it might look like a difficult situation. Home prices are very steep and if you are bogged down with a poor credit, it can be tough to be approved for this type of home loan.

But today the situation has changed. Today there are various programs designed to cater to people with new bankruptcies, collections and foreclosures to get a mortgage. There are national mortgage service companies that either give you a mortgage directly or direct you to a lender who can provide you a mortgage.

Follow these tips to help your chances of becoming eligible for a mortgage loan in California, with a bad credit history:

1. Review your credit report. Asking for your own credit will not harm your credit score unlike a lender asking for it. Go through your credit history and ensure all the information is correct. At times, a minor error like an account being unpaid as against an old bankrupt account can mean extra 10-15+ points added to your credit score. Ensure all closed accounts are marked as closed. Each account reported as bankrupt should be reported as it is and not as if the money is unpaid. Attempt to repay the small collection accounts, and then send the confirmation about the same to the major credit bureaus so that they can include it in your credit report. Modifying the information has become simpler as all the major credit bureaus now let you dispute any inaccuracies online. Ask for all the 3 reports, dispute any errors or inaccuracies if any and finish off the task within an hour. In the olden days, it would take hours or days to complete the required paperwork.

2. Look for a seller who is willing to pay closing costs or carryback a percentage of the loan. If you get a seller ready to help you, getting your loan approved from the lender becomes easier. If the seller pays your closing costs, it will save money that will let you make a small down payment. If the seller is ready to carryback a percentage of the loan than the loan-to-value may decrease sufficiently to allow the lender to consider it as a down payment. If the seller is ready to cooperate with you in making a down payment, they can help you make the necessary down payment. However it is illegitimate to offer you the down payment for their house, but by subscribing to down payment assistance programs like Neighborhood Gold and the Nehemiah program, it is completely legal.

3. Borrow or request a gift from relatives for money toward a down payment. Once you take your first mortgage, you can then take a 2nd or 3rd mortgage that is equal to the entire worth of your house, and now you can begin paying off the relatives. Remember if you want to take the money as a loan from the relatives, you must inform about it to the lender before signing the dotted line. Lenders generally are strict about the source of funds for the down payment and if you fail to be open, it can be regarded as a case of fraud.