If you’re interested in buying a house, you may wonder if having a criminal record could stand in your way. The short answer is yes—a misdemeanor or felony could disqualify you from getting a conventional home loan, but this is at the lender’s discretion. Your specific circumstances could also affect your eligibility. Learn what it takes to buy a house with a criminal record and some tips to improve your chances of success.
How Does Having a Criminal Record Affect Your Ability to Buy a House?
Lenders are likely to hesitate before granting you a loan if your criminal record check turns up a misdemeanor or felony. This demonstrates a potential lack of responsibility or financial stability and could make the lender question the likelihood that you will repay the loan.
Still, most lenders won’t automatically deny someone a mortgage just because something shows up on their criminal record. Instead, lenders often seek out more information before making a decision. Here are some questions you may be asked during the loan application process:
- What class of crime were you convicted of? Did you get in trouble for drug trafficking (a felony) or stealing a candy bar (a misdemeanor)? In general, felonies have a bigger impact on a lender’s decision than misdemeanors because they are more serious in nature.
- How long ago were you convicted? A trespassing charge from last year may be a deal breaker for some lenders, while the same crime committed over a decade ago may hardly matter. With this in mind, simply waiting a few years after your conviction to buy a house could improve your chances of getting a loan.
- What were the circumstances surrounding the crime? The specific crime you committed could also come into play. For instance, lenders may be willing to overlook a misdemeanor if your history doesn’t demonstrate a pattern of misconduct. However, most lenders hesitate to issue loans to people convicted of fraud, money laundering, or other financial crimes. Also, committing a crime of moral turpitude—considered vile or done with evil intent—will almost certainly disqualify you from getting a mortgage.
How to Buy a House with a Felony
Despite your best efforts to be a productive member of society, a criminal record of any kind can be a red flag to a potential lender. Follow these tips as you apply for a home loan with a misdemeanor or felony on your record:
- Approach different lenders: Anti-discrimination laws do not require lenders to approve convicted criminals for a loan. Such protections only apply to things like race, religion, and gender identity. This means lenders can choose to deny anyone with a criminal record. Just remember, every lender has different internal policies, so if one bank denies your application, you can always apply elsewhere.
- Be prepared for higher interest rates: A lender might approve your loan but at a higher interest rate to reduce their risk. You have the option to turn down such an offer and apply with other companies instead. But keep in mind that a high-interest loan may be the only option if you have a criminal record.
- Don’t bring up your history: Not every lender runs background checks. If you have a stable income from a reliable job, there may be no need to look into your criminal history. You can even specifically look for a lender that doesn’t run criminal record checks. Still, know that any questions about your work and housing history from the past few years could reveal your incarceration.
- Improve your credit score first: If you spent time in prison following your conviction, it may take a while to get your life back in order. You’ll need a few years of steady income and on-time credit card payments to build up your credit again. But the wait could be worth it. After all, a good credit score could lower your interest rate and discourage the lender from digging deeper into your past.
- Seek an expungement: To “expunge” is to “erase or remove” a crime from your record. If successful, expungement allows you to apply for a mortgage without being required to disclose the crime. Plus, even if the lender runs a background check, the conviction will not appear. The ability to erase an offense from your record depends on where you live, what crime you committed, how long ago the crime occurred, and other factors. Contact a criminal lawyer to learn more about your options.
Apply for a Home Loan in Oklahoma
Everyone makes mistakes, but that doesn’t mean you should continue to be punished for a misdeed you committed years ago. At Financial Concepts Mortgage, we’re proud to work with borrowers of all backgrounds. We can’t guarantee loan approval, but we’re willing to review your situation to see if we can find a way to work together. To begin the pre-approval process, please complete an online application or call us at (405) 722-5626 to speak directly with an experienced loan officer.