Mortgage Options for Those With Bad Credit

Mortgage Options for Those With Bad Credit

If you have bad credit, you may be worried about how you will afford a new home. However, there is a solution designed for people in your exact situation. The Federal Housing Authority, FHA, is a government agency that backs mortgages and helps prospective homeowners get bad credit mortgages that are government-insured. So, if you want to buy a home that meets your standards and have less than perfect credit, keep reading.

Compensating Factors for Bad Credit

You can overcome a poor credit rating by emphasizing that there are factors that show you in a favorable light. For instance, if you fell behind, you’ll need to show the reasons behind your financial hardship and how you recovered.

Those re-establishing their credit can show their record of recent payments. If you have poor credit, the loan goes typically through manual underwriting. That means a real person will comb through your application, including the additional information you provide. This improves your chances for approval.

There are many factors that can improve your chances of getting a bad credit loan, including:

  • 10% or greater downpayment
  • High income
  • Low debt-to-income ratio
  • Large cash reserves
  • No outstanding debt
  • Significant tenure with current employer
  • Proof of comparable rent payments

Establish as many of the above circumstances increases your chances of qualifying for an FHA loan.

Bad Credit Mortgages for First-Time Homebuyers

FHA loans offer low down payments and credit requirements. This means that you are more likely to qualify for them versus a conventional loan. If you have parents or other relatives who want to help you, an FHA loan makes it easy to use a gift as a down payment. In fact, the FHA allows up to 100% of the down payment to come from a gift.

Down-Payment Assistance and Grants

First-time buyers can sometimes buy a house with no down payment. Check out the various grants and down payment assistance programs available on the HUD website.

VA Home Loans

Veterans may be able to get a VA home loan. VA loans offer many perks to first-time buyers, including no mortgage insurance and no money down. The VA doesn’t require a minimum credit score. However, most lenders want to see FICO scores of 620 or higher. Although some VA lenders may accept a 580-credit score.

USDA Rural Development Loans

The U.S. Department of Agriculture offers USDA home loans for houses in rural areas. These rural loans are earmarked for families with low-to-moderate-income. This doesn’t mean you have to live on a farm or out in the middle of the country. To the contrary, 90% of land in the country is USDA eligible.

USDA loans offer 100% financing. Since you don’t have a down payment, the program requires a higher credit rating than FHA loans. Most lenders ask for a 640-credit score to qualify for a USDA home loan.

If you qualify for a VA, USDA or FHA loan, there’s a program out there for you. Talking to an experienced loan officer can point you in the right direction and help you get the home you deserve.

About author

You might also like

Business 0 Comments

How to criticize the best forex brokers 2019

It is a question that what is the best forex broker? To answer this question, I have to say there is no exact answer for this because the best forex

Business 0 Comments

Why You Need To Print Brochures for Your Business

The different brochures and catalogs are part of an excellent traditional marketing strategy, despite the growing popularity of online marketing. A well-designed syllabus is an article of great value, not

Business 0 Comments

Purchase a Business to obtain Maximum Profit

So many people are keen to understand about the ‘business sales’ market. It is a well known phrase nowadays and describes a marketplace where an individual can visit buy or

0 Comments

No Comments Yet!

You can be first to comment this post!

Leave a Reply