If you want to know how to get a mortgage with bad credit, the first thing to do is to find out what is considered bad credit. It starts with a FICO score of 579 and below.
FHA loans
There are many banks that offer so-called FHA home loans. These loans are insured by the Federal Housing Administration and are intended to increase the number of homeowners among Americans.
A Google search will open many options for banks that provide such loans.
FHA loans are available to people with a credit score of 500 or more. If your credit score is between 500 and 580, you must pay at least 10% of the home’s value as a down payment.
Adjustment
If your credit score is poor because your credit history is too short or you have never taken a loan, you can resort to an adjustment. This means the loan officer will consider factors other than your low credit score when deciding on your application.
Banks that offer these loans will need to provide documentation of your work. As well as income and data on how timely you pay utility bills or rent payments.
Portfolio loans
Portfolio loans are available from smaller local banks and credit unions. When applying for such a loan, you must provide more information, which allows you to explain why your credit score is low. Or to name the circumstances related to the fact that affected your credit rating.
The bank will review this additional information. And decide based on the circumstances, paying much less attention to your FICO score.
Veterans Administration Mortgage
Veterans Administration (VA) loans are designed to help the military and veterans become homeowners. While VA lenders generally want a credit score of 620 or higher, some do lend to applicants with as little as 580 credit scores.
How to get a mortgage if you have bad credit. Conclusion
Plan your budget, set up auto payments, and pay off your debts — there are a lot of tips to improve your credit score! To secure the best mortgage terms, follow these steps. For more information, sign up for a consultation at LBC Mortgage. We help find the best solutions that tailor to your financial needs.
