It is still possible for you to purchase a home with a low credit score. There are various different loan programs available to those on low incomes and credit scores. Here’s what you need to know.
How To Improve Your Credit Score
Whilst you can still purchase a piece of property with a lower credit score, you will find better rates and deals if you have an improved score. There are different strategies you can invoke to improve your credit score, the most effective being to pay off debts regularly. Pay off credit card balances to keep credit use low, and pay any minimum debt balances due on time. This will help bring your credit score up, as will not applying for too many credit cards or credit plans.
The Loans You Should Look Out For
There are a few different available loans that are catered towards individuals and families with lower credit scores. There are two primary methods of getting a loan for a home purchase, that’s with the government or with a private lender. Government backed loans could have lower requirements for a down payment, credit score or debt-to-income ratio.
Conventional loans are popular loans available to Americans. There won’t be a set number requirement for your income or down payment. In most cases, you will need a credit score of at least 620 in order to qualify. If you have a higher income or a higher down payment amount you can offer, then you could qualify for a conventional loan.
FHA Loans are loans backed by the Federal Housing Administration. This makes it appealing to first time buyers or those who haven’t bought a house in a number of years. The credit score required for these loans is lower than a convention loan, usually around 580. If you are able to pay a 10% down payment, then you could qualify for an FHA loan even with a credit score of 500-579.
You need to work with a lender who understand the requirements that you will have. One that has vast experience within the industry. The Home Loan Expert are one of the best FHA lenders on the market, who will talk to you and your family about how to make your dream home purchase a reality. They make the process hassle free; give them a call to get started on your journey.
How Much A Low Credit Could Cost You
A low credit score could mean you need to prove your reliability to a lender in other ways. This could be with added interest, as to help reassure a lender that you will pay as much off as you can. Over a set fixed term, this will cost you more than it would to be granted a loan earlier with an improved credit score.