Types of Home Loans for People With Bad Credit
Having a less than optimal credit score won’t ban you from becoming a homeowner. While the best way to secure a favorable mortgage rate might be to wait it out and work on building your score, sometimes life can’t wait. When you need to find home mortgage loans with a bad credit score, you still have plenty of options for types of home loans. Here are a few routes to get you started.
FHA Home Loans: This is probably the first recommendation you’ll hear. While most direct mortgage lenders want to see scores of at least 680, you can get away with a 620 on a FHA (Federal Housing Administration) loan.
High Down Payment: You might still be able to pull off a regular loan if you can offer a higher down payment in return. This minimizes the risk of the lender, because it means you’re borrowing less.
Prove Yourself: If you can provide verification of stable rent payments over the past year, lenders may be willing to take a chance on you. However, you’ll need to negotiate types of home loans in accordance with your current rent. If you pay $800 month on your apartment, for example, you’ll want a monthly mortgage rate in that same ballpark.
Explain Yourself: If there’s a solid reason for your low credit score that’s not necessarily your fault or isn’t applicable anymore, you might be able to find lenders willing to take you on. Remember that you’re asking for their trust, not begging for forgiveness. Explain your circumstances and offer an attractive payment plan.
Maybe you’ve found your dream home, or maybe you just can’t wait any longer to settle down. While simply waiting it out and working on improving your credit score over time might seem like the only solution, you don’t have to wait forever. No matter the reason for your credit or your need for a home now, don’t let a bad credit score prevent you from at least trying to find types of home loans that will work with your situation. You may be pleasantly surprised by the results.