Buying your own home rather than renting is everyone’s dream these days. But if you have had a financial mishap, such as missed credit payments or debt defaults, it can be challenging to get a loan. Mortgage companies will always check your credit score before they approve any house loans and if you have had financial difficulty, this could mean that you don’t get the mortgage that you were looking for.
But, the fact is, even if you have a low credit score or bad credit, you should not work yourself out, because there are mortgages available for everyone. All you have to do is find a willing lender that will work with your credit and find you a home loan.
1. FHA Minimum Credit Score
If you have less than perfect credit FHA loans is available to help you buy a home. The great thing about this program is that you are not require to pay a large down payment to buy a house. With a small down payment, you too can become a homeowner. FHA loans make it easier for you and others to qualify for homes. However, FHA requires a minimum 580 credit score to qualify for the 3.5% down rate; however, credit scores lower than a 580 can be accepted for qualification, the borrow will just need a larger down payment of 10%.
2. VA Home Loan Credit Score Requirements
VA home mortgage loans are similar to many conventional home mortgage loans, but they do have many significant benefits that are not found in conventional loans. You do not need a down payment, and you can “roll” the closing and loan fees back into the mortgage thus making it a 100% financing loan. As for credit requirements, the program does not enforce a minimum credit score, however most VA-approved lenders prefer around 620. The only catch is that you must meet certain military service eligibility requirements.
3. USDA Home Loans
The USDA Home Loan Program is offered through the United States Department of Agriculture and is government insured 100%. This loan is available exclusively to USDA approved lenders. Most people living in rural areas qualify for USDA. However, USDA lends homeowners with nothing less than 580 credit score and you may be more carefully evaluated.
4. Freddie Mac Home Possible® Minimum Credit Score
Home Possible® was established in March 2015, and their primary aim is helping buyers and low and moderate-income borrowers get into homes at a very low down payment. Also, Home Possible® accept a down payment of just three percent and there required credit score is for most lenders is 620.
5. Fannie Mae HomeReady™ Credit Score Requirements
Fannie Mae was released in December 2015 and is a great loan program for low to moderate income borrowers, and those finding a way to finance a house in low-income communities. The best thing about HomeReady™ program is regardless of your credit scores it allows non-borrower household member’s income and requires a minimum credit score of 620 to qualify.