How to Get a Home Loan When You Have Low Credit Score

Having a low credit score can be an issue in purchasing a home. One thing to understand, credit is a game, it has rules. Once you understand the rules, you can play the game to win. Fixxing credit is not that hard. I used to own a mortgage company and have decent depth on this issue. Call if you need help.

Owning a home is part of the American dream. If you’re tired of throwing away money on rent, then you should consider making a purchase. Even if your credit score isn’t the best, there are still many options available to turn your dreams into a reality. Bad credit loans and mortgages for those with low credit scores do exist.

Get a Home Loan When You Have Low Credit: FHA Loan

FHA is one of the best programs around for those with a low FICO. They also have a very nice down payment plan that helps those with little cash. If your credit score is at least 500, then you will be required to put down 10%. However, to get the low 3.5% down payment plan, then your credit score must be at least 580. According to City Creek Mortgage, because FHA loans are government-backed, they allow lenders to take greater risks. However, you should keep in mind that private lenders issue these loans, and each lender will have different requirements and terms for you to be approved. Even if your credit score is approved, the home must also pass the inspection requirements. These loans are eligible for first-time buyers or those who haven’t had a home loan in three years. Additionally, the house must be your primary residence.

Get a Home Loan When You Have Low Credit: VA Loans

VA loans are excellent options for veterans, service members, and select spouses. Many people turn to the VA for help on loans because this program is more lenient on credit and income requirements. Since there is no PMI nor down payment required, it’s one of the best options around. According to VA Loan Captain, like the FHA loan, these loans are backed by the government and funded by private lenders. Most lenders want to see a credit score of around 620, and you must have served in a branch of the military for at least 180 days.

USDA 503 Loan Program

If you live in a rural area, then there is another option for low credit loans that is often overlooked. The United States Department of Agriculture gives loans to people who otherwise might not be able to obtain them. These loans are for borrowers with a credit score of at least 630. The goal of this program is to help families with low-to-moderate income levels who live in rural areas. Keep in mind, many areas the USDA classifies as rural aren’t as off the beaten path as you would think. Their website has an address checker to identify potential areas near you.

Finally, having a credit score below 700 isn’t the end of the world. You can still fulfill your dream of owning a home. FHA offers the best programs around, but there are a few more that can get you out of a rental and into a place to call your own.

Now that you’ve gotten the loan, you’re ready to search for a house. Check out our listings to find your new home.

If you’re thinking of selling your home, contact us so we can help!

 Steelbridge Realty LLC  is a Licensed Real Estate Brokerage that utilizes cutting-edge marketing techniques and data-driven Real Estate solutions in today’s ever-changing environment. Our group of professionals have decades of experience and have navigated through many business cycles. Our diverse background gives us the tools to guide people towards successful decisions.

 

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