Every American citizen wants to get homeownership one day and this is what refers to the American dream. Now, buying a home is not as easy as it sounds. The first hiccup the citizens face is the low credit scores. When the FICO score is below 620, the borrower is not allowed for the conventional loan. So, do not get disheartened after facing rejection for the home loan application. There are still many home loans that are perfect for borrowers with low credit scores. In addition to the context, USDA loan, VA loan, and FHA loan are the popular options.
USDA home loan is a zero down payment mortgage which is backed by the government. The loan is applicable for the borrowers with 580 credit scores. There is another mortgage that is specially designed for military veterans. The loan does not follow certain credit score requirements but the lenders usually set 500 or 550 credit scores as the limit. Also, FHA loans are only applicable to borrowers with 500 or 580 credit scores. So, you can guess how the home loans for low credit scores in Houston, TX help the first-time homebuyers. However, there are numerous myths about loans in people’s minds. Go through the myths and find the correct option for you.
Myth #1: Only farmers can apply for USDA loans
Many people have formed a misconception that the farmers can obtain USDA loans. The loan can be obtained by anyone passing the income criterion. Additionally, the house needs to be placed in a particular place too.
Myth #2: VA loan takes a long time
It is not true that VA loans take a long time to close. The truth is that FHA loan and VA loan take the same time to close. Usually, the average period is considered as 40 days. In case, you applied for a conventional loan, it would take 39 days to close. The VA loan benefits (0% down payment and 100% financing) help the borrowers more than the conventional loans. To put it in a brief manner, the VA loan does not fall behind if the closing time is compared.
Myth #3: FHA loans are not easy to qualify
This is again a false statement because the FHA loans have lenient guidelines. The FHA loans are less restrictive and borrowers can qualify the mortgage easily. Hence, the mortgage intends to provide loans to borrowers with a poor credit score. Additionally, the low down payment percentage can help the borrower purchase the home.
Myth #4: Monitoring credit score hurts the report
The truth very much contradicts this statement. When your credit score is too low to be qualified, you must check the credit score regularly. You can take help from the lender to understand how you can track the credit score.
If you still need to clear other misconceptions about home loans for low credit scores, you must get in touch with a lender. Before choosing the final mortgage, a consultation with a lender is essential.
Author Bio: Joan Gallardo, a Senior Loan Officer, with 20+ years of experience, here writes on 2 questions to ask the best mortgage lender in Houston when you are about to choose one of the first time home buyer programs in Houston.