The Secret to Buying a House with Bad Credit

You might think that having a credit score in the 500s would keep you from buying a home. But that isn’t always the case. Depending on your circumstances, you may have lending options that make it possible to overcome that bad credit barrier when buying a home.

What Credit Score is Needed to Buy a Home? The minimum credit score you need to buy a home will vary based on a few factors: 1. The type of mortgage you want 2. The lender you’re asking 3. Who you are

Lender Credit Score Requirements Every lender has a set minimum credit score they require to approve homebuyers for a mortgage. Some lenders will accept lower credit scores while others have stricter requirements.

Also, be aware that lenders may change their requirements depending on the economy. There are certain times that lenders may be more flexible about approving a loan for a homebuyer with bad credit. During economic slowdowns, lenders may tighten up their credit score requirements, making it more difficult to qualify. During a strong, stable economy, they’ll relax those requirements.

VA Loans’ Credit Score Requirements

Your personal situation may also come into play when it comes to getting a mortgage with bad credit. The best example is VA loans, which are backed by the U.S. Department of Veterans Affairs. VA loans have no minimum credit score requirement.

First-time homebuyers can also generally find more flexible credit score requirements through certain programs, like the HomePath Ready Buyer through Fannie Mae and HomeOne lending program through Freddie Mac. It’s important to note that both programs can also work for homebuyers that have owned previously, as long as you haven’t owned a home in three years or more.

So, if you want to buy a home with bad credit, the first step is to call a HUD-certified housing counselor in your area. There may be a few extra steps after that, depending on your situation. We’ll describe each one in more detail now.

Now that we’ve gone over all the options that may help you buy a house with bad credit, let’s focus on whether you should take these options and run with them. While there are plenty of lending products that offer mortgages to people with bad credit, they all have one thing in common—higher costs.

The interest rate on a mortgage for someone with bad credit will be much higher than the interest rate for someone with good credit. The monthly payments will be higher and so will the total cost of financing your home.

Swipe Up To Read More about  The Secret to Buying a House with Bad Credit

Read more

Start Using Your Paid Time Off! It’s Good For You (And Your Career)

Your 5 Step Guide To Getting Debt Relief Fast

What’s the Difference Between Envy vs. Jealousy (And How to Overcome It)