3 Loans That You Can Get from Low Credit Score Mortgage Lenders
Your credit is on shaky ground, and you are thinking about buying a home. But you are nervous and wondering how to get approval for a home loan program with a low credit score? Well, it is true that mortgage lenders are quite skeptical about buyers who don’t have a good credit score. However, that does not mean you should stop dreaming about your home.
What is the way out? You can opt for one of the low credit score mortgage lenders in Houston, Tx, and apply for a home loan. But what are the loans that you can apply for? Here are the ones –
- FHA home loans
The Federal Housing Administration that is part of the U.S. Department of Housing and Urban Development (HUD), has a mortgage program, which can help homebuyers with a bad credit score. With this program, the FHA will not lend you money. Instead, it insures home loans. This means the FHA will repay the lender if a homebuyer defaults on a mortgage. So, the lender can determine the credit and income requirements.
Lenders follow the FHA’s guidelines and requirements, though. And to qualify for the loan, you will need a 580 credit score with a 3.5% down payment, or a 500 credit score with a 10% down payment, proof of employment, and monthly debt payments that are not more than 43% of your monthly gross income.
There are other requirements too. For instance, these loans have a maximum loan amount that can vary based on where you are buying a home. Ask about the requirements of an FHA lender before applying for the loan.
- VA loans
Are you a service member, veteran, or surviving spouse? Can you meet the eligibility requirements of the VA? Then, you may qualify for the U.S. Department of Veteran Affairs (VA) home loan program. The VA guarantees a loan that is similar to the FHA program. But a VA-approved lender issues the loan.
Although technically, there is no credit score requirement for VA-backed loans, many VA-approved lenders require a minimum credit score of around 580. And the requirement can vary from lenders to lenders. So, it would be better to ask for quotes from different lenders, compare these and then, opt for the best deal.
- USDA loans
Another great home loan option for low credit score home buyers. If you are a low to medium-income group homebuyer and want to buy a home in a rural area with a low credit score, then it will be the ideal home loan option for you.
Insured by the USDA, these loans are approved by local lenders. But there are certain requirements that you need to fulfill to get loan approval. So, ask about these to the lender and fulfill these to ensure approval.
As these are government-backed home loans, you can get approval despite having a low credit score. So, start looking for the lenders who offer the loans and apply for a low credit score loan today!