You were arrested five years ago, you spent three years behind bars for the crimes, and now you're out. You're trying to turn your life around.
In the past two years, you've gone back to school and gotten a job. Now you're interested in buying a home. Will lenders approve your mortgage application if you have a criminal record?
The frustrating answer to getting a mortgage after criminal convictions is: it depends. Receiving a mortgage loan is always up to the lender and their discretion. You have no legal protections that say a lender has to approve you for a loan. That goes for people without a criminal record as well.
Your lender is more likely to carefully consider granting your loan if your background check does not pass. Typically, a criminal record is a cause for concern because it could show a lack of responsibility or stability on your part, and the lender wants to make sure that you pay back your loan.
The law does not govern this, so lenders can set up all policies on their own. If the policy includes running a background check and denying those with a criminal history, they can do it.
Some policies might approve people with misdemeanors on their record but deny those with a felony or violent felonies.
Anti-discrimination laws mean they can't deny you based on things like your race, religion, or gender identity. Still, the laws do not force lenders to ignore an arrest record.
A lender might approve your loan but offer a higher interest rate to ensure they make a profit on your loan. This can also be financial protection on their part — if you miss payments, then they are covered by a large amount of interest they make over time.
You can always say no to loans with high interest rates and look at other companies. A criminal record might affect your chances with other companies, so sometimes accepting a high interest rate is the only option for buying a home.
Luckily, what you're going to find is that many lenders never actually decide to run a background check. If you don't bring up your record, they may never know. If you have a stable job and income, they may not dig deeper into your history.
You can also ask around and seek a lender that does not run background checks.
On the flip side, any loan officer may ask you other questions that expose that record. For instance, they'll want to see what your credit score looks like. A low credit score can be a red flag that you have not been working or paying off credit. You may need to improve your credit score before getting a loan.
Lenders commonly want to know your employment history. They'll likely also look into your residency, perhaps going back for the last decade. Some even call past landlords as part of a background check or application review.
So, if they want to know where you lived for the last 10 years and where you worked for the past three years, you're quickly going to run into a situation where you have to tell them you were in jail for part of the time.
They may still approve the loan. After all, you're now out and employed. However, it can be a red flag and may go against specific policies, leading to the lender rejecting your application.
If you're facing criminal charges, it's essential to think about all of the consequences of a conviction. If you are convicted and sentenced, it can impact your life in many different ways, for years after your sentence is up.
To protect your future, be sure you know about all of your criminal defense options. The best way to seal a criminal record or avoid a criminal conviction is to work with an attorney as soon as possible.
If it is before your conviction, your attorneys can try to lower the charges. If it is after the sentence, they can work to expunge the record to reduce the negative effect it has on your future.