Both my boyfriend and I have very, very bad credit. We have paid all of our debts off, but that still does not help our cause.

We want to own a home and NOT rent.

How are we going to be able to get a mortgage w/ such bad credit. We do not want to be renters forever. We CAN afford a home, but we can't get the loan.
Sorry, we are getting married. That's why we are buying a home.

wait for a bit, let your credit score catch up with you. do things to increase it. (for example, i increased mine by financing some new tires & paying them off early).

next year, the housing market is supposed to be better for buying, i've heard. take the time to save up a down payment, maybe enough to buy some points. the link has some good info you may be interested in.

good luck!

In todays mortgage market, it will be hard to find a affordable loan, Do this, restore hour credit score, Do not rush in buying a home, In most part of the country property values are declining, Let it stabalize while you are building your credit so you can get a good interest rate, In any case this is not a good time to buy, You will possibly end up being upside down meaning owing more thant what the property is worth. In that case you will not be able to sell the home if you have to.So I suggest just go and rent for now.

you can find a rent to own home. there are individuals that will work with you.
or if you can put a large deposit down it won't matter if you have good credit . money talks.
there are some books out there that help you fix your credit.

Veryyy confused here ,
If you paid all your debts ,
How can you have bad credit ?

A huge part of the FICO score is debt to income and if you have no debt . . . ?

Only if there are charge offs and bankruptcies can it be less than good .

Either you wait until your score comes up with time
And the charge offs or bankruptcy are old history . . .
Then you can get a good rate .

OR , suck it up and pay the higher % they charge for bad credit mortgages .

Personally , I'd give it a couple of years (if what you say is true about having NO debt) .
It will save you an additional fortune in % charges .
In the meantime , save up the 20% down so you are not wasting $$$$$$$ on PMI .

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[Hedwig]

If you have no debt, you may not have much history for the score to be computed on. Get some credit cards, use them wisely, keep the utilization below 50% (preferably below 30%).

Save some money for those unexpected expenses that always come up when you buy a house. Don't think because you can afford a monthly payment that you can afford the house. Also, what happens if you get sick or lose a job. Do you have several month's worth of payments in a liquid account?

So, save a down payment plus at least several thousand dollars for an emergency fund. Establish some credit and show that you can use it wisely. Then, in a few years, you can really afford a house. Renting isn't always bad.