A Guide To Your Home Loan Options : Purchasing a home can be a daunting idea. It may seem virtually difficult to obtain a loan when you first start the home purchasing process, but did you know that there are home loans specifically designed for people with bad credit?
Your credit may not be as big of a barrier as you believe. This post will go over your options and mortgage qualification procedures if you have bad credit and want to buy a home.
What Do Mortgage Lenders Consider A Bad Credit Score?
Depending on the lender and loan type, a minimum score may be needed for a mortgage. Government-backed loans usually have less stringent credit score criteria than conventional loans, which have a minimum credit score requirement of 620.
As for the precise figure, ExperianTM, one of the three major credit agencies, defines “subprime” as anything below a 670 FICO® Score. Fair and poor subprime ratings are further separated by ExperianTM: anything below 579 is considered poor, and scores between 580 and 669 are considered fair. If your credit score is less than 500, you may find it challenging to obtain a mortgage and should probably work on raising it first.
Can You Buy A House With Bad Credit?
Indeed, it is still possible to purchase a home even with bad credit. When you have low credit, cash might be your best friend. The more cash you have available for a down payment, the better. This is because you might only be eligible for a specific amount of home loan due to your credit score. You may still buy the house of your dreams if you have the extra money to make up the difference.
Because each lender will have different requirements, the lender you ultimately choose will also be an influence. Even while you can obtain a loan with terrible credit, the substantially higher interest rates will mean that your monthly mortgage payment will increase.
