If you think your bad credit situation is stopping you from buying a home, think again. The possibilities of getting into a home have increased over the last few years, and there are several ways to achieve homeownership without having stellar credit.
Start With Your Most Current Credit Score
Without knowing your current credit score, you don’t know how yours compares to a “good” credit rating. Lots of folks stop themselves cold without even looking at their score, locking themselves out of a home purchase for which they could qualify.
So, get a current credit report and measure up exactly where you stand today. Request your credit reports once a year for free from each of the three credit reporting companies at www.annualcreditreport.com. With your score in hand, you can now compare various programs and determine your chances for getting a home loan.
A credit score in the 700s is very good and will easily get approved for most loan packages. A score in the 600s will be tougher but, depending on the lender, it’s possible to still get a home loan from bad credit home loan lenders. A credit rating in the 500s will be difficult, hands down, and your efforts may be better spent improving your score first. Most conventional loans start to be possible above 620.
Build Up Your Cash
Lenders like to see borrowers with “skin in the game.” That means if you can pay a big down payment on a home, you’re less likely to fail on the home loan, thereby reducing your risk rating. Remember, a credit score is just one factor. Your income, assets, savings, debt and ability to pay all matter as well. Show a high income with solid savings, and it can negate some of your bad credit scores.
Veteran Assistance
If you’re a U.S. military veteran, V.A. loans from the U.S. Veterans Administration can really help your situation. VA loans can be approved with a credit score as low as a 620, and they allow for 100% financing.
Personal Improvement
Remember, you can dramatically change your score in just a few months with concentrated effort on savings, paying down debt regularly and consistently, and improving your income base. Think about taking on an extra gig in addition to your regular job. The extra money can get socked away in your savings, and you’ll have a down payment before you know it.
Government Program Loans
Both rural USDA home loans and Federal Housing Authority (FHA) loans – better known as HUD home loans – also offer big opportunities. U.S. Department of Agriculture backs home loans for those who choose to live in rural areas to encourage farming. These typically require a 640 minimum credit score.
If you’re thinking about buying a home, contact a trusted mortgage lender such as Mortgage Investors Group to review your personal financial situation and calculate the possibilities available to you. Such experts can also point out what you can change to improve your credit score and open up new opportunities in a few months’ time. You might just be surprised what’s possible.