While the amount of your down payment and your income history are critical factors in getting a mortgage, your credit score and history are also looked at. Typically, a credit score of over 650 is required by most lenders. However, there are some types of mortgages and lenders that will give you a mortgage with a lower credit score.
While the amount of your down payment and your income history are also critical factors in getting a mortgage, your credit score and history are also looked at. Typically, a credit score of over 650 is required by most lenders. However, there are some types of mortgages and lenders that will give you a mortgage with a lower credit score.
This is a federal government program that encourages home ownership. The FHA guarantees mortgage loans made by private lenders to eligible borrowers. The FHA also has loan guidelines which are more liberal than regular (conventional) mortgages. This type of mortgage is available to almost everyone and for most properties.
The FHA will allow a mortgage for a borrower with a credit score as low as 580 with a down payment of only 3.5%. Better yet, they will allow a score down to 500 with a 10% down payment. Borrowers still must show that they have adequate income to pay the required mortgage payments and certain loan defaults will make a borrower ineligible.
This is another government program that encourages home ownership. It works the same way as FHA, where the loans are made by private lenders but guaranteed by the government. However, VA loans are only available to active military, veterans and surviving spouses of military service members. If you fit this requirement, then a VA loan is the best option for having poor credit, because the VA has no set minimum credit score. The borrower again just needs to show the ability to make the mortgage payments. You can also often get this type of mortgage with no down payment.
This mortgage company is reported to accept credit scores as low as 580. What makes this company a good option, is that they will underwrite your loan application manually. That means instead of getting a “machine” application score, they will look at your situation individually. This gives you a better chance to have your mortgage application accepted. They also have some of the best interest rates even for poor credit applicants and are noted for very good customer service.
PNC is also reported to accept applicants with credit scores as low as 580. This lender also is liberal in how they analyze your credit history, giving you a better chance to get approved. They offer many kinds of mortgages with lower down payments and flexible repayment schedules.
There are some basic things you can do to improve your ability to get a mortgage, even with poor credit.
– Increase your down payment: The more money you put down, the less risk the lender has.
– Buy a modest home with as low a price as possible: This is especially true if you have a limited down payment.
– Get a co-signer: Having a co-signer with a stronger credit score than you also strengthens your application.