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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, too quickly. What followed was the "mortgage crisis" that everyone talks about and which we're still feeling the effects of. Because there were too many houses on the market, prices started to go back down. Sometimes people had a mortgage loan that was more than their house was worth.

During the boom times, people with bad credit got loans, but those loans usually carried very high rates of interest. At times rates began low, but then they grew higher as the years went on. Since the home loan was more than the house was worth, it was not possible for people to sell, and then, since payments were going up, they often got stuck with homes they couldn't even afford.

People started to fall behind on their loans, which caused their homes to enter foreclosure, where they eventually ended up back in the hands of the bank holding the mortgage. This caused the number of houses on the market to go up dramatically, forcing the prices downward, creating the cycle that we are still suffering from 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.