Is it possible to get a home loan when you have bad credit? This question has definitely haunted in your sleep before. Now, there is good news to people with financial woes – you can get a house loan even if your credit is as low as 500. Generally, the lenders take a glance at your FICO scores ranging between 300 and 850. For the best interests, you essentially need to have a credit score of 700 or higher. As money matters seem rockier than ever, the authorities are willing to help people fulfill their dreams.
Generally, most of the borrowers are new to this path of mortgage and poor credit score. If there is a full guide to walk you through the process, you can save all the money spent on rented apartments. Bad credits can happen to everyone and you should be aware of the available options before you. Also, purchasing a house is a crucial step in financial investment. That’s why; here is a full guide on house loans for bad credit informing you about the important things.
Finding a Loan that Suits You
If your credit has gone downhill, you need to follow difficult steps to make things right. At this time, the state and federal level government loan programs are quite helpful. If your credit score is lower than 580, you can get FHA loan with 10% down payment. When your credit score is 580 or above, you can avail 3.5% down payment. Again, the United States Department of Agriculture is responsible for sanctioning certain home loans in rural regions. USDA loans come with minimum 640 score but exceptional cases permit 581 score. For VA loans, the military veterans or their spouses may have to show at least 630 credit score. There is no particular FICO score required and the foreclosure waiting period is the shortest here.
Pay Attention to On-Time Payments
The automated underwriting system is pretty hard on the missed or late payments. When you have been missing payment deadlines, you should wait for five or four months before applying for the loan. This usually works as a proven way to minimize the negative impact caused by payment history. It is also best to track the payment deadlines and start paying credit card bills on time.
Go for a Larger Down Payment
When you do not have the best credits, you can hope for approval through saving for a down payment. This acts an indicator to a lender that you can pay the loan eventually. In order to save for down payment, you can follow a strict budget and limit expenses. Finding another way to increase income is a great way to up your credit score. You can seek help from dear ones who may be willing you to gift the money for down payment.
There are also other loan programs that the professional lenders can find depending on your situation. Also, they can suggest ways to make the score better. So, resort to professionals and build your dream house effortlessly.
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.